Obligatory pension plans for employees in Poland

A form of pension program called PPK became obligatory for Polish companies with at least 250 employees on 1 July 2019. Companies with at least 50 employees will adopt the same duty from 1 January 2020, companies with 20 employees from 1 July 2020, and all other companies by 1 January 2021.

It is the first time in Poland that a pension program will be obligatory for employers as up until 2019 any such programs were voluntary. All employers will be affected, and they should prepare and implement a respective pension plan.

The PKK will not have to be implemented in employment entities which, at the date of their inclusion in the PKK duty, will operate an employee pension scheme (PPE) and pay basic contributions to the amount of 3.5% of salary, and which have at least 25% of employees as members of PPE.

An employer who fails to meet the obligation to make payments to the PPK will be subject to a fine ranging from PLN 1,000 to PLN 100,000.

At its heart, the PPK is intended to improve the structure of pension savings of Polish workers. In practice, this also equates to a slight increase in labour costs for employers and a lower net salary for employees.

Nonetheless, there will be a welcome pay packet to the amount of PLN 250 financed by the government for each new employee joining a plan. In addition, an annual payment of PLN 240 will be financed by the government to encourage employees to remain a member of the plan.

Employees who participate in the PKK must contribute 2% of their remuneration and, they can also make a voluntary payment of the same amount. Employers will finance a basic payment of 1.5% of salaries and an additional voluntary contribution of 2.5% of salaries.

Under the new law, all employees automatically become members of the plan, but they are free to opt out of it. This opt out process needs be repeated every four years; otherwise, they will re-added to the plan as a matter of course.