Upcoming Pension System Reform to Affect All Employers

This week, government officials shed some light on their plans to overhaul the existing pension system in Poland. Prime Minister Mateusz Morawiecki and his ministers had announced an intention to create an entirely new system of saving for retirement a few months ago, but this week they revealed some new details and assumptions that will be taken into consideration when constructing the new system. The new legislation will affect virtually every employer and employee in Poland and will have an impact on the future of the Polish economy.

New Occupational Capital Schemes are to become a solution to the looming pension system crisis. The current pension scheme, operated by the Social Insurance Institution (ZUS), is inadequate and Polish people are not keen on saving money for their retirement. Thousands, if not millions, of Polish citizens in the future will receive meagre pensions, the kind of money that will not allow them to support themselves in the elderly age.

The Recent Updates on the Pension System:

The new pension system will mirror the solutions which have been already present in numerous Western European countries, e.g. the United Kingdom and Germany. The employee will contribute a percentage of their salary, and so will the employer. The third participant will be the state who will pay their contribution as well and provide other incentives for participation in the programme, e.g. exemption from capital gains tax which is charged on all deposits.

Joining the new scheme will be automatic for the employed, with the possibility to opt-out. The Polish government expects participation to reach 75%, approximately 8.5 million people. The reform will be introduced in stages. In 2019, the biggest Polish enterprises (employing more than 250 people) will join the programme. In 2020 – medium, small and micro enterprises.

If you are an employer, your minimum contribution will be 1.5 per cent of the amount constituting the basis for calculating pension and disability contributions, with an option to raise that by an additional 2.5 per cent.

The project entered the consultations phase.