The Demographic Reserve Fund

The Demographic Reserve Fund (Fundusz Rezerwy Demograficznej, FRD) has the status of a special purpose state fund. It was established by the Act of 13 October 1998 on the social insurance system, to better secure the solvency of the old-age pension benefits.

The Demographic Reserve Fund plays the role of a contingency fund for the old-age pension fund separated from the Social Insurance Fund.

The Demographic Reserve Fund has its own legal status as an entity. The Social Insurance Institution is a FRD administrator, and any decision on making FRD funds available may be taken solely by the Council of Ministers and – since 1 February 2014 also by the ZUS Management Board.

The FRD is formed from:

  • a part of retirement insurance contributions,

  • from monies derived from the privatization of State Treasury assets and properties,

  • from profit derived from investments,

  • from the interest earned on deposit accounts run by ZUS, which are not the incomes of FUS and ZUS,

  • from other sources.

To maximise the security and rate of return of its resources, the Demographic Reserve Fund invests them in certain financial instruments, i.e. in treasury bonds – 82.31%, shares – 16.47% (as on 31 December 2014) as well as treasury bills and bank deposits.

In 2014, in line with its investment policy, the Demographic Reserve Fund purchased shares listed on the Warsaw Stock Exchange (WSE). The change in the value of the FRD unit, calculated for this period for the stock part, was 1.91%.

The obtained rate of Demographic Reserve Fund return was higher than the main investment indexes of the Warsaw Stock Exchange – the WIG, which increased for the same period by 0.26%, and the index of the largest listed companies the WIG20, whose value fell by 3.54%.

The return on the total assets under FRD management in 2014 amounted to 4.03%.

The funds collected in FRD may be used only to:

  • cover the deficit of the FUS old-age pension fund for demographic reasons,

  • grant a no-interest loan to complement the FUS old-age pension fund for the purpose of current payments, to ensure the liquidity of the Social Insurance Fund; the loan should be repaid within 6 months from the day of its receipt.

In the period from 2009 to the end of 2014 the FRD account was credited with a total of PLN 20.22 billion in respect of the State Treasury assets from privatisation. From 2010 to 2014 the Demographic Reserve Fund transferred to the old-age pension fund account a total amount of PLN 19.39 billion to cover the deficit related to demographic reasons.

In 2014, the FRD transferred to the pension fund account the amount of PLN 2.5 billion.
Over the last six years, in spite of the use of FRD resources, FRD assets have increased by PLN 0.83 billion only thanks to a considerable inflow of resources from privatisation.
At the end of 2014, the total assets managed by the Demographic Reserve Fund amounted to PLN 17.81 billion.


(Note: 1 EUR = ca 4.32 PLN)