Employee Capital Plans (in Polish Pracownicze Plany Kapitałowe) is a new, common and generally voluntary plan for additional and regular saving for pension which will be earmarked for payout after you are 60 years old.
Who will be obliged to establish Employee Capital Plans?
ECPs have to be established by the so-called employing entities (the "employers") which include:
employers in the meaning of the Labour Code,
entities which have a supervisory board,
agricultural production co-operatives or machinery rings.
From when to apply the new laws?
at least 250 people
as of 31/12/2018
at least 50 people
as of 30/06/2019
at least 20 people
as of 31/12/2019
other entities, including public finance sector entities
Who is exempted from the obligation to create an ECP?
The obligation to establish an ECP does not apply to:
employers who offer another plan of this type, i.e. an Employee Pension Plan (Polish abbreviation "PPE") and pay basic PPE contributions of at least 3.5% of a worker’s remuneration, provided that at least 25% of their workers participate in the PPE,
micro-enterprises, provided that all their workers submit a declaration that they do not want to participate in the ECP,
individuals not running a sole proprietorship.
Who will be covered by ECPs?
Employed persons in the meaning of the new act, i.e.:
employees (except for, among others, juveniles hired for vocational preparation),
individuals who are at least 18 years old and work under an agency contract or a contract of mandate or another contract governed by the regulations on mandates,
supervisory board members remunerated for their functions,
individuals who perform outwork contracts and are at least 18 years old,
members of agricultural production co-operatives or machinery rings,
liable to obligatory retirement and disability pension insurance on that account in Poland.
Who will be allowed to join an ECP?
Workers who are less than 70 years old can join the plan, however, persons under 55 years of age join the plan by default. Persons aged 55 or more generally join the plan on their own request (exception: if within the preceding 12 months such persons were hired by a given establishment for at least 3 months, they join the plan by default).
According to the act, an ECP may be maintained by a financial institution, such as:
an investment fund managed by an investment fund company,
a pension fund managed by an open-end pension fund company (PTE) or an employee pension fund company,
an insurance company.
The employer, in consultation with the trade union, selects the financial institution with which to conclude the ECP management contract. If there is no trade union at the employer's establishment – the financial institution is to be selected in consultation with the employees' representative(s) selected in the procedure adopted at the employer's establishment.
The employer will first conclude an ECP management agreement with the financial institution, and then – on behalf of the employees – an EPC maintenance agreement.
The rules for payment of contributions and the amounts:
The worker’s EPC contributions are deducted from his remuneration after tax.
The contributions are payable from the month after the month in which the legal relationship following from the ECP maintenance agreement was established.
The employer is obliged to:
calculate and pay the contributions to the selected financial institution,
calculate and deduct the contributions from the worker’s salary and pay them to the selected financial institution,
the employer- and worker-financed contribution shares are calculated and deducted from the worker’s salary on the pay day.
annual extra contribution paid by the state budget – PLN 240
employer's extra contribution – up to 2.5%
worker's extra contribution – up to 2%
Money collected under the ECP will be paid out after the participant turns 60:
if after reaching the age of 60 the participant decides to withdraw the invested funds, he can pay out 25% of those funds on a one-off basis and the remaining 75% will be paid out to him in at least 120 monthly instalments (i.e. through 10 years),
a participant over 60 years of age will also be entitled to apply for the payout of funds invested in the spouses’ joint EPC account (if the spouses earlier decided to invest in a joint account –joint payout).
Payouts before turning 60 will be possible under special circumstances and under the principles stipulated in the act (e.g. grave illness).
If you would like to know more on that subject, please contact Rödl & Partner advisers.