The reform of social security will initiate, as in other countries that privatize their system of old-age insurance, the series of positive quantitative and qualitative changes in the Polish capital market. It is commonly believed that changes in the capital market will occur through the intermediation of open-end pension funds. This channel will be most important during first year of the reform. Total effects of the social security reform on capital markets will be, however, transferred not by one but three channels related to individual pillars of the social security reform:

1. First pillar - introduction of individual accounts in the pension fund administered by the Social Security Fund (ZUS), and relating the amount of pensions with the amount of contribution paid up - will change savings behavior of the individuals insured. The redistribution element has been removed from the old-age insurance system. An increase willingness to buy additional insurance against the risk of old-age will represent a long-term effect of the change.
2. Second pillar - establishment of open-end pension funds - will fill the gap in the market of institutional investors in a long-time horizon.
3. Third pillar - staff pension funds with a maximum basic contribution slightly lower than the one paid up into open-end pension funds (7%) - will affect a dynamic increase of investment funds' and life-insurance companies' assets. These institutions have gained legal authorization to establish staff pension funds.

Medium-term analysis of the social security reform implications on financial markets was limited in this article only to open-end pension funds. Year 2009 was assumed to be a final date when pension funds would begin to pay first life pensions.

Just in the first year of activity, assets of pension funds will be higher than assets of open-end investment funds, and in the second year they will exceed assets of life-insurance companies. Open-end pension funds will become major domestic institutional investor.

Most powerful influence on the investment strategy of pension funds will have a statutory requirement of a minimum rate of return. It will result in the unification of portfolios of all funds and a conservative profile of assets management.