Poland: The Act of October 4, 2018 on Employee Capital Plans (PPK) amended before even becoming fully effective

Employee Capital Plans were introduced by the aforementioned Act of October 4, 2018. The idea of the Employee Capital Plans is to obligatorily deduct a small part from the remuneration of each employee, which will then be invested in the long term. In this way, employees will be able to build additional capital for retirement. As a rule, the contributions for the Employee Capital Plans will be 3.5% of the employee’s gross salary and will be financed commonly by the employee (2% of their gross salary) and the employer (1.5% of the employee’s gross salary).

The abolition of the 30 times of the average salary limit, above which the contributions for PPK would not to be deducted, as planned in the amendment, is widely criticized, as in a short perspective the amendment would bring higher national budget incomes, but in a longer perspective it means elimination of a safety buffer, that was supposed to protect the pension system against paying extremely high retirement benefits in the future.

The amendment will come into force after being passed by the Higher House of the Polish Parliament (Senate) and being signed by the President of the Republic of Poland. The amendment, labeled as document 3410 is available at the website: https://www.sejm.gov.pl/Sejm8.nsf/druk.xsp?nr=3410.