Poland: Retirement plan developments – COVID-19
In Poland, the COVID-19 pandemic has resulted in a delay in the roll-out of mandatory defined contribution plans as well as a temporary suspension of changes to the state pension system.
Relaxation of timeline for employers to introduce PPK retirement plans for employees
Employee Capital Plans (PPK) are part of a voluntary long-term retirement savings programme which was launched in Poland in late 2019.
In the first phase of the programme, all employers with over 250 employees were mandated to offer a PPK plan to their employees. The participation rate for the first phase was 39% of the eligible work force. The original plan then involved enrolment for the second phase (companies with 50-250 employees) commencing in May 2020.
However, as part of government actions to support small- and medium-sized companies during the COVID-19 pandemic, the deadline for the second phase has been extended to November 2020.
This new deadline coincides with the launch of the third phase of the programme (obliging companies with 20-50 employees to offer a PPK plan to their employees).
Suspension of reversal of pension reforms
In a dramatic move in 2014 the Polish government reversed the “public-to-private” pension reforms that had been underway to that point. The reversal saw the government transfer the equivalent of US $40 billion of bond assets that had been accumulated within the private pension system back to the public system.
The government then announced a further reversal of the previous system and had intended to formalise this in 2020. Account holders were to be asked to choose between transferring the remaining savings to Pillar 3 individual pension accounts (IKE), subject to a one-off tax of 15%, or tax-free transfer of the assets to the state social security institution (ZUS) with income tax then charged at maturity.
Due to the eruption of COVID-19 the Ministry of Finance has decided to suspend these actions for the moment. This move has been triggered primarily by the significant drop in value of the accounts (in March 2020), but also by mis-estimation of the share of participants willing to move their assets to the ZUS.
The Ministry has also stated however that the transfer will eventually be carried out some time in the future.
Contacts
Dominic Clark
Principal and Consulting Actuary, Milliman
VIEW PROFILE
Email:
dominic.clark@milliman.com
Tel: +34 609 026 561
Dominic Clark
Principal and Consulting Actuary, Milliman
An international consulting actuary with extensive European experience.
Dominic has over 25 years of industry experience as an international consulting actuary, and his career to date has seen him involved in a range of international pensions and benefits projects, principally advising multinational companies and their global operations.
He performs a wide range of actuarial consulting projects for clients across Southern Europe and Central and Eastern Europe, with significant experience in the areas of financial reporting, funding and accounting (IFRS, US GAAP) valuations and actuarial modelling.
His past experience includes actuarial valuations for mergers and acquisitions and accounting purposes, benefit plan transformation (including design, costing and employee communication) and acting as an advisor with respect to international and local rules and regulations.
Dominic is fluent in Italian and Spanish.
Contacts
Dominic Clark
Principal and Consulting Actuary, Milliman
VIEW PROFILE
Email:
dominic.clark@milliman.com
Tel: +34 609 026 561
Dominic Clark
Principal and Consulting Actuary, Milliman
An international consulting actuary with extensive European experience.
Dominic has over 25 years of industry experience as an international consulting actuary, and his career to date has seen him involved in a range of international pensions and benefits projects, principally advising multinational companies and their global operations.
He performs a wide range of actuarial consulting projects for clients across Southern Europe and Central and Eastern Europe, with significant experience in the areas of financial reporting, funding and accounting (IFRS, US GAAP) valuations and actuarial modelling.
His past experience includes actuarial valuations for mergers and acquisitions and accounting purposes, benefit plan transformation (including design, costing and employee communication) and acting as an advisor with respect to international and local rules and regulations.
Dominic is fluent in Italian and Spanish.