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30 October 2019

Employee Capital Plans from the employee’s perspective

The Employee Capital Plans (PPK), enacted in October 2018, comes into force this year. All workers between 18 and 55 years old will be included in advance. However, one can opt-out of the PPK by submitting a proper declaration.

Employee Capital Plans are a voluntary, private pension system, which works along with the public pensions system of the Social Insurance Fund.

After signing two types of agreement (about managing and operating PPK), the employer pays a monthly 1,5% of the total employees’ revenue. If he wishes, he may increase the premium by 2,5% of the total revenue, but the employee must decide about it before signing the contract. Moreover, the equivalent of 2% of income (mandatory) will goes from the employees’ revenue, and an additional 2% of income at the employees’ request. The exception is when the workers’ income does not exceed 120% of the national minimum wage. In such a case, the contribution equals 0.5% of the monthly salary.

Furthermore, the State Treasury will make additional payments to saved capital in specific cases:

  • one-time initial payment, in the amount of PLN 250, funded by the Labor Fund,
  • yearly fee in the amount of PLN 240, when it met the conditions defined in the bill.

Payments and inheritance of funds from the PPK

The Act assumes that the stored PPK capital is the private property of an employee. This applies to the entire sum with grants from the state budget (mentioned above). Nevertheless, there are exceptions. If you withdraw the full amount before the age of 60, you lose the right to the additional State Treasury payments. However, in the event of the employee’s death, the funds are inherited. Half of the sum goes for the spouse (community property is mandatory), and the remaining amount goes for the people selected by the employee.

All financial transfers related to the mentioned above takes place within the PPK system. The transference of capital takes place from one PPK account to the other.

Resignation from the PPK

Each employee can decide whether he wants to join the PPK program. However, without submitting a resignation form, the employee will join the PPK program automatically. Moreover, you should reapply the mentioned resignation form every four years to prevent re-entering the PPK system. You can also withdraw the participation in the PPK during the program.

An employee who decides to take part in the PPK program has the opportunity to determine the amount of the contribution that a monthly employer will pay out of his payment, as well as the possibility of using several capital plans at the same time (if employed in several companies).

Employee’s age

The PPK is intended to cover all employees aged 18-55, who have not resigned from participating. The only exception is when companies implement the Employee Pension Program sooner. Employees aged 55-70 can benefit from the Employee Capital Plan, although, contrary to the younger employees, they must submit an official application with a request of addition to the PPK. The regulations of the act do not apply for employees over 70 years of age.

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ARPI Accounting is a part of ARPI Group, a Norwegian holding which started to operate in Poland in 2001.

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