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Employees’ Capital Pension Schemes soon to be universal and mandatory for the employers

Employees’ Capital Pension Schemes (ECPS) – revised bill has been referred by Ministry of Finance for public consultation and inter-ministerial reconciliation.

The core premise has not changed – ECPS will rely on conjoint input of the employer, employee and state budget with a view of improving pension scheme structure. From the employer’s perspective the program will be compulsory and universal. However, it is the number of employees that will determine company’s due date for introducing OCS.

In accordance with the following schedule the scheme will cover:

  • From 1st January 2019 – mandatory implementation of ECPS for all companies employing at least 250 people.
  • From 1st July 2019 – mandatory implementation of ECPS for all companies employing between 50 to 249 employees.
  • From 1st January 2020 – mandatory implementation of ECPS for all companies employing at least 20 people.
  • From 1st July 2020 – mandatory implementation of ECPS for remaining employers and public finance units.

The employers exempted from ECPS:

  • Prior to the ECPS legislation coming into force have introduced Employee Pension Scheme (EPS), with participation of at least 50% of the employees, and minimum contribution of 3.5% of salary.
  • Adopted the ECPS, however decided to introduce EPS in a prescribed form and from the month following the ECPS registration with the local authority can cease ECPS contributions for persons participating in the EPS.
  • Are physical persons not pursuing business activities and micro-entrepreneurs, subject to all employees opting out of ECPS.

Participants of ECPS are generally all those employed by the employer regardless whether under employment or civil law contracts (mandate, agency or other type service agreement) as well as Members of the Board of Directors remunerated for the position.

Persons between age of 19 to 55 will automatically be subscribed to ECPS. Others, between age of 55 and 69 (including), can voluntarily take part in the program.

For employers ECPS mean:

  • Basic contribution equal to 1.5% of salary (voluntary increase in additional contribution by maximum of 2.5% is available);
  • Option to diversify additional contribution on the basis of employee’s seniority, internal remuneration regulations or collective employment agreement;
  • Individual selection of the financial institution (Investment Funds Company, General Pension Company or insurance company) where the savings will be held – subject to the institution being recognized for the ECPS purposes;
  • Contributions and expenses incurred for ensuring appropriate fulfilment of ECPS obligations can be qualified as tax deductibles;
  • Employer’s contributions will not be included in the salary which constitutes basis for calculating the level of obligatory contributions for the pension schemes.

For employees ECPS mean:

  • Voluntary participation in the program – option to opt out,
  • Privacy (contributions assigned to a person) and heritability;
  • 2% Base contribution with option to increase up to 4%, calculated from the net salary;
  • Reduced contribution from 2% to min 0.5% if salary does not exceed minimal statutory level (ie. part-time employees);
  • Introductory contribution equal to 250 PLN and annual premiums of 240 PLN – both income tax exempted;
  • Option for earlier use of funds for the purpose of first flat purchase or withdrawal of 25% of funds in situations of severe, chronic illness of employee or his spouse/children (PIT exempted in some cases);

Sylwia Kwinta
Payroll Manager

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