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Employee Capital Plans

By virtue of the Act of 4 October 2018 on employee capital plans, all employers are required to implement the Employee Capital Plan (PPK) in their organizations.

Employee Capital Plans are a common, voluntary and private long-term saving system for employees. The purpose of the implementation of the PPK is to increase financial security during the retirement period.

Below, we present the PPK to a wider extent focusing on issues concerning, in particular, employing entities.

The obligation to implement the PPK

Who is affected by the PPK?

All entities employing at least one employee are obliged to introduce the PPK. At the same time, an employee is any employed person who is at least 18 years old, irrespective of the employment basis (contract of employment, contract of agency, contract of mandate etc.) who is subject to compulsory retirement and pension insurance in Poland, as well as members of supervisory boards, if they are subject to compulsory retirement and pension insurance.

Who is not affected by the PPK?

  • Employers who before the deadline to implement the PPK introduce PPE (Noncontributory Pension Plan). However, the PPE contribution cannot be lower than 3.5% of remuneration and if at least 25% of people employed by a given employer joined the PPE.

Comparison of PPK and PPE - most important differences:

 

PPE

PPK

minimum contribution rate

employer – 3,5%

employee – 0%

employer – 1,5%

employee – 2%

obligatory agreements

- company agreement between the employer and the employee representation

- management contract between the employer and the financial institution

- management contract between the employer and the financial institution

- a contract for running a PPK between a financial institution and an employer on behalf of all employees

the role of trade unions /

employee representation

decision-making nature (constituting entitlements)

opinion-forming nature, not-binding on the employer

understanding of remuneration

no limitation of the annual basis for assessing contributions for retirement and pension insurance when calculating the PPE contribution

there is a limitation of the annual basis for assessing contributions for retirement and pension insurance when calculating the PPE contribution

information duties

information duties towards employees and supervisory authorities (PPK) lie primarily with the employer

information duties towards employees and supervisory authorities (PPK) lie primarily with the financial institution that manages the PPK

  • Microentrepreneurs, i.e. employers whose annual net turnover from the sales of goods and services does not exceed in Zlotys EUR 2 million and whose average employment in the preceding year is less than 10 people if all employed persons submit their resignation from joining the PPK.
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Amount and structure of contributions to PPK

Government

  • One-time welcome surcharge – PLN 250 for each employee
  • An annual surcharge – PLN 240
  • The contribution to PPK does not constitute the basis for calculating Social Insurance Institution (ZUS) contributions (it is the basis for calculating the tax)
  • The ability to credit contributions to the PPK to tax deductible expenses.

An example of calculating the monthly contribution to PPK and reducing the employee's net salary

  • The employee's remuneration PLN 5 000 gross  ≈ PLN 3 550 net
  • The minimum employer PPK contribution 1,5% -  PLN 75  (PLN 5 000 x 1,5%)
  • Tax on the PPK contribution financed by the employer -  PLN 14 (PLN 75 * 18%)
  • The minimum employee PPK contribution 2% - PLN 100 (PLN 5 000 x 2%)
  • Reduced by PPK net remuneration for withdrawal – PLN 3 550 – PLN 14 – PLN 100 = PLN 3 436 
  • The sum of the monthly contributions to PPK – PLN 175 (PLN 75 + PLN 100)

How to implement PPK?

Checking the employment status

The deadline for implementing the PPK depends on the employment status of the employing entity and is as follows:

The deadline for applying the provisions on PPK

Employment status

1 July 2019

 250 and more people employed as of 31 December 31 2018

1 January 2020

50 - 249 people employed as of 30 June 2018

1 July 2020

20 - 49 people as of 31 December 2019

1 January 2021

other employing entities

Earlier accession to the PPK is possible only within the corporate group.

Example: if one of the copartnerhips in the corporate group is obliged to join the PPK from 1 July 2018 due to the employment status, then other copartnerhips within the corporate group may join the PPK as at that date.

Choosing a financial institution that manages the PPK

The choice of a financial institution requires consultation with all trade unions. If there are not any trade unions, such consultation should be with the representation of the employees selected in the mode adopted by a given employer.

Statutory selection criteria:

  • assessment of the proposed conditions of the management of resources collected in the PPK
  • effectiveness in assets management
  • experience in managing investment funds or pension funds
  • best interests of the employed

A conclusion of a management contract for a PPK with a selected financial institution

The contract of management between the employer and the selected financial institution is concluded once, within 10 working days before the deadline for concluding a contract for running the PPK for the first participant.

Presenting the offer of the selected financial institution to employees

This is the moment when employees should be informed about the selection of financial institutions and about their obligations. In particular, the employer is obliged to inform employees about the possibility of resignation from the PPK and collect the required statements of employees provided by the financial institution.

Generally, information duties towards the participants of the PPK lie primarily with the financial institution which immediately after the conclusion of the contract for the management of PPK provides the participant of the PPK with information specified in the Act in electronic form.

A conclusion of a contract for conducting a PPK

The contract for conducting the PPK is concluded between the employer and the financial institution with whom the contract for the management of PPK was concluded on behalf of and for the benefit of the employee - one contract plus an attachment with the list of persons who are participants of the PPK.

The contract is concluded within 10 days after the lapse of three months from the date of the obligation to apply the provisions of the Act on PPK at a given employer.

In relation to newly employed persons, the contract for conducting the PPK for them is concluded after the third month of employment with a given employer. In practice, there is no obligation to conclude another contract for conducting the PPK because it is assumed that on the first day after the expiration of three months from the date of employment, there are legal effects resulting from a contract for conducting a PPK, which means that a new employee enters the PPK automatically, unless they submit a resignation.

As a consequence, people employed for short, one-time contracts, e.g. contract of mandate for a total period of up to three months, do not impose an obligation to charge PPK contributions for these persons.

Employees who have reached 70 years of age cannot participate in the PPK, there is no contract for conducting the PPK in relation to these people.

Calculation and payment of the contribution to the PPK

The first contribution to the PPK should be calculated and collected starting from the first month following the month in which the contract for conducting the PPK was concluded.

The contribution is transferred to a financial institution by the 15th day of the month following the month in which the contributions have been calculated and collected.

A timetable for implementing the PPK

The obligation to apply the provisions of the Act on the PPK

The final date for the conclusion of a management contract for PPK

The final date for the conclusion of a contract for conducting a PPK

The month for which you must calculate and collect the first contribution

The date of payment of the contribution to the financial institution

1 July 2019

26 September 2019

 10 October 2019

remuneration paid in November 2019

 

15 December 2019

1 January 2020

27 March 2020

10 April 2020

remuneration paid in May 2020

 

15 June 2020

 

1 July 2020

26 September 2020

10 October 2020 

remuneration paid in November 2020­

 

15 December 2020

1 January 2021

1 January 2021

10 April 2021

remuneration paid in May 2021

 

15 June 2021

 

A timetable for implementing the PPK for a newly hired person:

Sanctions for failure to implement the PPK

  • fine up to 1.5% of the remuneration fund of a given employing entity in the turnover year preceding the commission of a prohibited act – for the lack of a timely conclusion of a contract for the management of PPK and for persuading the employed person to resign from the PPK
  • fine from PLN 1,000 to 1,000,000 - for failure to comply with obligations such as the conclusion of a contract for conducting a PPK within the deadline, making payments to the PPK within the prescribed dates, keeping documentation related to the calculation of payments to the PPK
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In case of any questions or the need to discuss this issue, please contact our expert Agnieszka OSIŃSKA:

e-mail: ekspert@rsmpoland.pl

tel. +48 61 8515 766

fax +48 61 8515 786