Employee pension schemes (EPS) as an alternative to Employee Capital Plans (ECP)
I. General assumptions
Employee pension schemes are part of Pillar III of employee retirement savings, which are similar in nature to employee funded plans. The EPS is created to raise funds for disbursement.
Participation in the programme is voluntary and open to all. Employee Pension Plan may be an alternative to Employee Capital Plans (ECP), and a strong asset for the employer compared to the competition.
II. Withdrawal of accumulated funds from EPS
You can only withdraw your EPS savings once you have reached retirement age or have early retirement rights.
A withdrawal of money from the EPS may be made when:
- an employee (an EPS member) is 60 years of age or older and will apply for a payout;
- an employee (EPS member) will be entitled to an early retirement pension, be 55 years of age or older and submit an application to that effect;
- an employee (EPS participant) aged over 70 years without an application having to be submitted;
- the heir will apply for payment after the death of the PPE participant.
III. Interaction between ECP and EPS
In principle, participation by an employer in occupational pension schemes does not exclude it from the obligation to join the ECP.
exception: The ECP Act does not apply to an employer if:
IV. Benefits of joining the EPS
From an employee’s perspective, the main advantage of EPS is that the entire contribution is financed by the employer. From the employer’s point of view, this is a disadvantage.
From an employee’s perspective, joining an Employee Pension Schemes means that they will receive a higher pension in the future. In addition, the money raised on EPS belongs to the employee and may be inherited and paid out at the appropriate age is exempt from capital gains tax.
We encourage you to read the previous articles on ECP. If you have any questions or doubts related to the implementation of PPK, please contact our Law Office.
The next article will outline the differences between the ECP and the EPS.