The Employee Capital Plans (Pracownicze Plany Kapitałowe PPK) aim at gathering funds for future retirement. What are the most important rules for making contributions and what do their amounts depend on?
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The conditions for gathering and managing funds are set out in the Act on Employee Capital Plans of 4 October 2018. Contributions made to PPK are financed by:
IMPORTANT! The maximum total amount of contributions of an employee and employer to the PPK fund may not exceed 8% of gross remuneration.
Participation in PPK is voluntary. Persons between 18 and 55 years of age are automatically enrolled into the program, whereas persons between 55 and 70 years of age can join it after signing-up.
Basic contributions to the PPK fund come from both PPK participants and employers. The amount of basic contributions financed by an employee is 2% of his/her remuneration (it may be less than 2%, but not less than 0.5% in the case when the employee’s monthly remuneration from various sources is lower than 1.2 times the minimum remuneration).
The participant may change the amount of the basic contribution by submitting an appropriate declaration, which will be valid from the month following the month of its submission to the employer. The basic contribution is deducted from the remuneration after taxation.
Contributions made by an employer amount to 1.5% of the remuneration (not changeable), are financed by the employer, but are not included in the basis for calculating compulsory pension insurance contribution. However, they are subject to taxation as employee income.
The PPK entities and participants are exempt from making contributions in case of:
The calculations of basic and additional contributions financed by participant and by employer shall be made by the employing entity. Moreover, this entity is responsible for making contributions` transfers to the selected financial institution and collecting contributions from PPK participants` remunerations.
However, the employer shall not be liable for possible mistakes in the contribution calculations if they are due to incorrect information provided by the employee. However, any claims for contributions are time-barred after 5 years from the due date.
ATTENTION! It is the employer’s duty to inform the PPK participant about the possibility of reducing the basic contribution amount and the possibility of making an additional contribution.
Every 4 years, starting from 1 January 2023, the employer is also obliged, by the last day of February, to inform the employee who has resigned from making contributions about resuming the transfer of contributions to his PPK account, if he does not again submit a declaration of resignation from participation in the fund.
Additional contributions are financed by both an employee and an employer. Furthermore, the additional contributions include a one-time welcome contribution and an annual contribution, both are financed by the Labour Fund.
An employing entity may make additional contributions to the account of a PPK participant in the amount of up to 2.5% of the employee’s remuneration depending on the length of employment and the provisions of the collective labour agreement or remuneration regulations in a given company.
A PPK participant may make additional contributions to his PPK account in the amount of up to 2% of the remuneration or resign from them completely by making an appropriate declaration submitted to the employer. Possible changes are valid from the next month after the month of making the declaration.
The contributions financed by the PPK participants are calculated and collected on the date of remuneration payment. Then, by the 15th day of the month following the month in which the contributions were calculated and collected, they are transferred to the selected financial institution managing the fund.
If the payment of remuneration in a given company is made more often than monthly, contributions to the PPK shall be made only once by the end of a given month.
After full 3 months from the date of the participant’s accession to the scheme (the condition is that all basic contributions for these months have been made), the participant receives a one-time welcome contribution of PLN 250 from the Labour Fund.
Moreover, a PPK participant receives once a year the so-called annual contribution if, in a given year, the amount of all contributions made to the participant’s account (basic and additional ones) was equal to or higher than 3.5% of the 6 times the minimum gross domestic remuneration applicable in the year for which the contribution is due. Participants whose basic contributions are lower than 2% must accumulate at least 25% of this amount. The annual contribution amounts to PLN 240 and is financed from the Labour Fund.
The annual contribution may only be made once a year, regardless of the number of the PPK participant’s accounts (the account opened at the latest or, if all of them were opened on the same day, the one with the most funds on it).
The annual contribution is not due to a PPK participant if:
The annual contribution shall be made by 15 April of the year following the year for which the contribution is due.