PPK- what is it?
PPK or Employee Capital Plans is a new, private pension system aimed at long-term accumulation of savings under the so-called III pillar of the pension system. This system is based on the participation of three entities - an employee, an employer and the state.
PPK - who will be covered by the program?
The legislator decided, in relation to the PPK, to implement the so-called "opt-out" option which means that all employees under 55 will automatically become participants of the program with the right to resign by submitting a declaration of withdrawal. Employees between 55 and 69 years of age will be able to join the program on a voluntary basis.
PPK- who will pay?
As mentioned above, the essence of the PPK will be that the contributions, called by the legislator "payments", will be financed by both employees and employers. The employee's basic payment will amount to 2% of the employee's remuneration constituting the basis for assessment of social security contributions, and 1.5% will come from the employer with the possibility of increasing by an additional 2% of remuneration for the employee and 2.5% of the employer. The employer's additional payment may also be subject to differentiation based on the length of employment or on the basis of the provisions of the remuneration regulations or the collective labor agreement applicable to a given employer.
PPK – who and when?
- From 1st of July 2019 - all entrepreneurs employing at least 250 people will be required to create a PPK,
- From 1st of January 2020 - the obligation to create a PPK will cover companies employing from 50 to 249 employees,
- From 1st July 2020 - all companies employing at least 20 people will be obliged to create a PPK,
- From 1st of January 2021, - the remaining employers and units of the public finance sector will be obliged to create a PPK.
PPK or PPE?
The obligation to join the PPK will not cover the employers which will implement the Employee Pension Program (PPE) under which the employer will pay the contribution at a minimum level of 3.5% of the employee's remuneration, under condition that at least 25% of the employees join the PPE. BE ADVISED! An additional condition for exemption of joining PPK is that the first PPE contribution should be paid in the month preceding the obligatory implementation of the PPK as provided for by the Legislator (see scheme above). Due to the fact that the PPE registration procedure to the register kept by the Polish Financial Supervision Authority lasts about 3 months, the decision on which of the programs (PPK or PPE) will cover the employer should be made in advance.
We will inform you in subsequent entries about the detailed mechanisms of the new legislation and the obligations it imposes on employers.