PPK – how to prepare for them?
In our article devoted to Employee Capital Plans you could read about the most important information about this new, private pension system kept under the so-called III pillar of the pension system.
A particularly important issue that will be addressed in this article is the implementation of the PPK, and therefore the activities that the employer must perform to properly pass through the implementation process.
Dates for individual employers
The first step in the PPK implementation process is verification of the employment status, because the number of employed employees depends on the date that the act sets for individual employers to introduce a PPK. Depending on the number of employees employed, the legislator has set the following deadlines:
- until 1st of July 2019 – when employing, as at 31/12/2018, at least 250 employees,
- until 1st of January, 2020 – when employing, as at 30/06/2019, at least 50 employees,
- until 1st of July 2020 – when employing, as at 31/12/2019, at least 20 employees,
- until 1st of January, 2021 – date for other entities including entities from the public finance sector, i.e. courts, offices, colleges and health care institutions (public only), Social Insurance Institution, etc.
The above-mentioned article discusses the issue of choosing between PPK and PPE (Employer Pension Program) and the conditions that must be met so that the employer can make such a choice. It should be borne in mind that in a situation in which an employer will have to (or wishes to, if he has a choice) introduce a PPK, it will involve the necessity of budget planning and taking into account increased costs. First of all, the employer must remember about the obligatory payments in the amount of 1.5% of employees’ remuneration, as well as about optional payments in the amount of up to 2.5% of remuneration. As part of expenses, employers should also anticipate the administrative and organizational costs of a PPK, e.g. a costs of administration employees who will be responsible for the PPK.
Selection of the entity that offers the PPK.
The new law clearly indicates which financial institutions will be able to offer PPK services. At the moment, the full list of entities that will provide services in the field of PPK is unknown, however, the employer should analyze the offers of financial institutions, that are already present on the market, in advance. The offers are to be available on a special prepared website, which is supposed to be operational in the first half of 2019.
Bearing in mind the content of art. 7 par. 3 of the Act, the employer should make a choice primarily on the basis of financial institutions proposed conditions for managing funds accumulated in the PPK, their efficiency in asset management and their experience in managing investment funds or pension funds, and taking into account the best interest of persons employed. In accordance with par. 4 of the aforementioned provision, the employer should consult the trade union organization and, in the absence thereof, the opinion of the representation of the employees.
Conclusion of the contract
First, it should be pointed out that the Act distinguishes the operating contract for the PPK (chapter 2 of the Act) and the contract for the management of the PPK (Chapter 3 of the Act). The operating contract precedes the management contract and is concluded in an electronic form that allows the content to be recorded on a durable medium. It is concluded not later than 10 working days before the date on which in relation to the first person employed the employer is obliged to enter into a contract for operating a PPK, in accordance with art. 16 of the Act. The art. 10 of the Act contains elements that a operating contract must contain, for example, parties to the contract, terms and procedures for concluding contracts for management of a PPK, terms and dates of making payments for PPK, amount of additional payments, etc. It should be pointed out that the employer should determine at this stage which employees aged 55-70 declared their willingness to join the PPK.
According to art. 14 of the act, the contract for management of the PPK is concluded with the financial institutions with which the employing entity concluded an operating contract for the PPK. The contract for management includes additional and individualized data, e.g. how to submit declarations on the division of payments made to the PPK between individual funds of a defined date, the conditions for collecting funds and managing them by particular funds of a defined date, the manner of submitting instructions, etc.
We encourage you to contact our Law Firm, which offers support services in conclusion of PPK contracts, as well as in introducing administrative and communication solutions in workplaces in order to properly and efficiently implement the PPK.