- 04 Dec 2018
What is PPK? How does it work? Who does it affect? Ius Laboris Poland Raczkowski Paruch have made these seemingly complex questions easy to answer through their E-book, Vademecum PPK.
On 1 January 2019 the new Act on Employee Savings Plans (PPK, Pracownicze Plany Kapitałowe) is set to come into force. The PPK are a new form of additional pension saving. The system will be mandatory for employing entities and voluntary, but in practice quasi-mandatory, for the employed persons.
The launch of the programs will be spread over two years, depending on the level of employment. This will allow the different entities to prepare for their new obligations, of which quite a number are foreseen by the legislator.
Structure of PPK contributions
In the PPK, both the employing entity and the enrolled individual finance the contributions. Each of them will be obligated to finance, from their own funds, the basic contribution, as well as the additional contribution if they declare that they will make the latter. The contributions are defined as a percentage of the PPK enrollee’s remuneration, understood as the basis for the calculation of pension and disability contribution.
The mandatory basic contribution of the employing entity will be 1.5% of the remuneration. In the PPK management contract, the employing entity will be able to declare an additional contribution of up to 2.5% of the remuneration. In turn, PPK enrollees will finance a basic contribution of 2% of the remuneration. However, if his or her remuneration (from various sources) does not exceed the minimum wage, the contribution can be lower (but not lower than 0.5% of the remuneration). In addition, PPK enrollees will be able to declare financing for additional contributions amounting to 2% of the remuneration. We recommend taking the necessary steps to adjust your payroll system to the making of PPK contributions.
Voluntary nature of the PPK
Saving in the PPK is voluntary for the employed persons. An employed person is, however, automatically enrolled in the program. Therefore, an individual who does not want to participate should file an appropriate written declaration with its employing entity. The declaration takes effect in the month of its filing. This means that from the moment of filing the declaration, PPK contributions will no longer be charged of the enrollee, and all the contributions made in the same month will be returned.The declaration can be filed at any point in time, also before the person in question is automatically enrolled in the PPK. The declaration is valid for 48 months. It can be renewed before this period ends. In consequence, the employed person will continue not saving in the PPK.
If an individual fails to renew the declaration, they will be automatically enrolled in the PPK starting on 1 April following the end of the above mentioned 48-month period.
The employed person who decided to withdraw from the program can rejoin it at any moment by filing an appropriate application. In such a case, the prior declaration ceases to be binding and the employing entity will start making PPK contributions starting in the month following the month when the application to join the PPK was filed.
You can access the full version of the Vademecum PPK e-Book here