On 1 January 2019 a new Act on Employee Savings Plans (Pracownicze Plany Kapitałowe, PPK) is set to come into force.
PPK are a new form of additional pension saving. The new system will be mandatory for employers and voluntary, but in practice quasi-mandatory, for employees.
The launch of the PPK will be spread over two years, depending on the number of employees and the type of organisation (smaller companies and public sector organisations have longer to implement). This will allow the different categories of employer to prepare for their new obligations, of which quite a number are foreseen by the legislator.
Structure of PPK contributions
In the PPK, both the employer and the PPK-enrolled employee finance contributions. Each of them will be required to finance the basic contribution from their own funds, as well as an additional contribution if they declare that they will make one. The contributions are defined as a percentage of the PPK-enrolled individual’s remuneration (this is defined as the amount used to calculate pension and disability contributions).
The employer’s mandatory basic contribution will be 1.5% of the employee’s remuneration. In the PPK management contract, the employer will be able to declare an additional contribution of up to 2.5% of the employee’s remuneration. In turn, PPK-enrolled individuals will pay a basic contribution of 2% of their remuneration. If the employee’s remuneration (from various sources) does not exceed the minimum wage, their contribution can be lower, but no lower than 0.5% of their remuneration. PPK-enrolled employees will also be able to make additional contributions amounting to 2% of their remuneration.
Voluntary nature of the PPK
PPK is voluntary, but employees are automatically enrolled in the programme by default. This means that individuals who do not want to participate in the scheme need to file a written declaration with their employer. The declaration takes effect in the month it is filed. This means that from the moment the declaration is filed, the enrolled individual will no longer be charged for PPK contributions, and all contributions made in that month will be returned. The declaration can be filed at any time, including before the person in question is automatically enrolled in the PPK.
The declaration is valid for 48 months. It can be renewed before this period ends. Renewal will mean the employed person will continue not saving in the PPK. If an individual fails to renew their declaration, they will be automatically enrolled in the PPK starting on 1 April following the end of the 48-month period.
An employee who decides to withdraw from the programme can rejoin it at any moment by filing an application. If they do so, their prior declaration ceases to be binding and the employer will start making PPK contributions in the month following the month when the application to join the PPK was filed.
Work on the bill continues (it has passed in the Sejm, the lower house, and in the Senate). The information presented here is up to date as of 26 October 2018. We recommend employers take the necessary steps ahead of January 2019 to adjust their payroll arrangements to the PPK contribution system.