PPK and their legal basis
Employee Capital Plans (PPK) is a retirement savings system introduced in Poland under the Act of 4 October 2018 on Employee Capital Plans.
This Act establishes:
rules for collecting funds in indonesia phone number example Employee Capital Plans (PPK),
the processes of concluding agreements regarding PPK management and running PPK,
issues of financing and making payments to PPK,
procedures related to transfer payments, withdrawals and refunds of funds accumulated within the PPK.
PPK are mainly aimed at increasing the financial security of people of retirement age by creating additional sources of savings.
Who does this system apply to?
Employee Capital Plans (PPK) automatically enroll persons employed between the ages of 18 and 54 (persons aged 55 and over must submit an application to join the program themselves).
It is worth emphasizing, however, that every employee has the option to resign from participating in PPK. To do so, they must submit a declaration of resignation from making PPK payments to their employer. It is worth bearing in mind that submitting such a declaration means losing benefits, such as employer payments or state subsidies.
Main elements of PPK
Participants: The system covers all employees who are not already covered by voluntary pension funds (OFE) . The obligation to participate covers employers and employees.
Contributions: The employer and employee contribute funds to the system through regular contributions. Contributions are set as a percentage of the employee's salary. The employer is required to pay at least 1.5% of the employee's salary, and the employee may voluntarily decide to make additional contributions.
Fund management: Funds collected within the PPK are invested, which allows them to multiply over time. The PPK participant has the option of choosing an investment fund from the offer available within the plan.
Payment of funds: The accumulated funds are available to the PPK participant after reaching retirement age. They are available in the form of an annuity or a lump sum payment, depending on the participant's choice.
Insurance: The Employee Capital Plan participant has the option to designate a person who, after his death, will become the purchaser of the funds accumulated in the PPK account. The designated person will receive their rights to the funds without having to go through the inheritance process.
More about the PPK account payment system
The employer selects a financial institution that manages the PPK by opening named accounts for employees, where savings are collected — private PPK accounts. You do not save money on your own . In addition to the mandatory contribution from the employer, who also undertakes to make regular payments, the state also undertakes to pay into your PPK system. The scheme looks as follows:
PPK management
The employer, if it has at least one employee, is responsible for managing your Employee Capital Plan (PPK) . For this purpose, it concludes a PPK management agreement with a financial institution.
The choice of a financial institution is made in cooperation with the company trade union or employee representation, if such an organization does not exist. When choosing an institution, the conditions for managing funds in PPK, the institution's effectiveness in managing assets, and experience in managing funds are taken into account.
The PPK management agreement must meet certain standards and its terms cannot be less favourable than those presented by the financial institution on the PPK portal on the day of its conclusion!
The regulations exempt certain entities - micro-entrepreneurs, individuals employing other people for purposes unrelated to business activity and entrepreneurs running Employee Pension Programs joined by at least 25% of employees - from the obligation to conclude a PPK management agreement.
Consent to the management of Employee Capital Plans (PPK) is concluded on the basis of an agreement, taking into account the following conditions:
The PPK management agreement is concluded:
No earlier than after 14 days of employment,
No later than by the 10th day of the month following the month in which the 3-month period of employment expired.
An exception to this rule occurs when:
The employed person declares before this deadline that they will not make any payments to the PPK,
Will terminate cooperation with a given entity.
Withdrawal of PPK funds before reaching the age of 60
It is worth noting that there is an option to withdraw funds accumulated in Employee Capital Plans before retirement age.
When you wish to withdraw your savings, please remember that the amount will be reduced by:
capital gains tax ,
30% of the funds coming from the contribution made by the employer,
the entire contribution comes from subsidies from the state.
Life situations considered “special” in which you can withdraw your accumulated funds on terms other than those above:
serious illness of the PPK participant, his/her spouse or child (you can withdraw up to 25% of the funds without the obligation to return them),