The assumptions of the PPK program are the result of cooperation between:
- Polish Development Fund,
- employers' organizations,
- trade unions.
The signing of the act was preceded by extensive public consultations. The government and social partners including representative trade unions and employer organizations participating in the panel of the Social Dialogue Council all gave their positive opinions.
Employee Capital Plans are a common and voluntary long-term saving system for employees, which is developed and co-financed by employers and the state.
Scheme of the Employee Capital Plans program
A specially developed information portal, MojePPK.pl, has been operating since the beginning of 2019. It runs a broad information campaign, publishes numerous questions and answers, and publishes downloadable information materials for employers and employees, including in foreign languages. Offers of financial institutions for employers participating in the PPK program are published on this site, and employees will be able to check the value of their savings in PPK on the website.
The most important benefits of the PPK program
PPK means greater financial security for citizens.
The public pension system guarantees retirement to working individuals, however due to the aging of the population these benefits will not be high. The issue of low pensions particularly applies to those who are currently under 40 years old and have not accumulated initial capital in the Social Security Fund (ZUS). Savings from PPK may supplement the pension - due to the accumulated capital on the PPK employee account, future pensioners will be more prosperous.
Saving in PPK is voluntary and very profitable..
If we save on our own, we only have the amount we were able to save. The option of PPK is much more advantageous. To put it simply: the employer makes a monthly contribution in the amount of PLN 1 to every PLN 1 saved by the employee, and the state adds an annual subsidy. Thus, the employee saving capital in his or her own PPK account accumulates a double amount, which is professionally invested on a regular basis.
A participant may withdraw from the PPK.
This can happen both at the stage of creating the program in the workplace, and at any time in the future; the employee's account in PPK is fully private, and the accumulated funds can be inherited.
Social surveys show that nearly 80% of Poles would like to have savings, however only a dozen or so percent save for the long term.
Of course, many families today have too low salaries to save. Currently, however, salaries are growing rapidly, and research conducted by the Central Statistical Office (GUS) shows that over 80% of Polish households have growing financial surpluses every month. Unfortunately, Poles usually save for the short-term and less efficiently than citizens in developed countries. This is evidenced by the excessive share of current deposits (low-interest or interest-free) in banks, while an insufficient amount of funds are invested.
Participation in the PPK program is very simple and needs almost no additional actions. At the same time, it allows for effective management of home finances by creating long-term and actively invested savings - every employee may become an investor in the Polish and international markets through specialized funds and funds that charge low fees.
PPK is a program of solidarity and social responsibility of employers, as well as one which raises the standard of the Polish labor market.
Each employer will be obliged to create a PPK for their employees and pay at least 1.5% of gross remuneration to their accounts in the program. Administrative obligations of employers related to the creation of the PPK have been simplified to the largest possible extent, and with remunerations that grow at a rate of 7% annually, the 1.5% contribution should not lead - according to the calculations of the National Bank of Poland - to a decrease in the profitability of the enterprise sector. Employers' involvement in the PPK program will be appreciated as their contribution to the long-term financial security of employees, and raising labor market standards will increase the attractiveness of professional activity and increase employee motivation - which will be beneficial for employers.
Benefits for employers and the economy
PPK is a long-term increase in the development and stability potential of the economy, beneficial for increases in remunerations and profits of enterprises. The Polish economy is developing dynamically, however foreign debt is very high. Following the period of the communist Polish People's Republic, local capital remains in short supply, and the level of assets and savings rates of Polish households are among the lowest in EU countries. Small capital stocks result in low investment and are a threat to Poland's economic development potential, including by holding back the growth rate of remuneration and the competitiveness of Polish enterprises. The PPK program may imoact a whole series of negative trends. Several billion PLN in savings accumulated every year under PPKs should be a driver for development, improve the local capital market, reduce foreign debt, raise the level of Poles' assets, accelerate investment and economic growth - all this is associated with benefits for employees and employers.
Simple rules and private savings
Payments to the PPK account will be made from three sources: from the employer, the employee and the state. For employees and employers, the amount of contributions will be calculated as a percentage of the gross remuneration. State contributions will include amounts independent of the employee's income. Everyone who decides to save in a PPK will receive a one-time welcome contribution of PLN 250. Then, every year, upon meeting certain conditions, the Labor Fund will credit the employee's account with PLN 240.
Check your future savings with our Employee Capital Plans calculator
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An employer employing at least one person for whom pension and disability pension contributions are paid to the Social Security Fund (ZUS) will select the financial institution managing the employee's PPK and will open a personal PPK account through it, where the savings will be credited.
For employees aged 18 to 54, automatic enrollment to the PPK will apply (employees aged between 55 and 70 submit an application to join the program on their own). The employee will be able to withdraw from participation in PPK by signing a declaration of resignation.
PPK is a capital system that is not part of the pension system, therefore savings in the employee's account are private, may be paid out at any time, and can be inherited. A person saving under a PPK plan will be able to freely use the accumulated funds after reaching the age of 60, regardless of their status of professional activity. Once the age of 60 is reached, a PPK participant will be able to decide on the use of accumulated funds:
- The employee may continue to save money in the PPK.
- The employee may use the default form of withdrawal payment: withdraw 25% of funds in a single withdrawal, and withdraw the rest monthly within 10 years (the withdrawal payment in this form will be exempted from capital gains tax, as this is to encourage employees to withdraw the accumulated funds for a longer period of retirement).
- The employee may withdraw the remaining funds in any number of installments. The employee may make a one-off payment of 100%. It needs to be mentioned that reduction of the payout period below 10 years will result in the obligation to pay capital gains tax due.
- The employee will also be able to make a transfer payment:
- to a policy at an insurance company with the right to a periodic or lifetime benefit,
- to a term savings account in accordance with the conditions specified in the Act,
- an employee may withdraw funds in the form of a marriage benefit (payment from one joint marriage account).
In exceptional cases, it will be possible to withdraw the collected funds earlier: part of the funds (in the case of a serious illness of the participant or their relatives), or the entire sum (to cover the own contribution when taking a loan for the purchase of an apartment or building a house).
More information on Employee Capital Plans may be found on the PPK Portal at www.mojeppk.pl.
The role of Polish Development Fund
More information on the role of Polish Development Fund may be found on the corporate website. Information for financial institutions that build IT systems communicating with the PPK Records is also published on the website.