The Polish government announced its intention to require that employees be enrolled in new supplemental, defined contribution (DC) retirement vehicles (or equivalent plans). The new plans will be known as Employee Capital Plans (PPK - Pracownicze Plany Kapitalowe) and Individual Capital Plans (IPK - Indywidualne Plany Kapitalowe) and aim to increase the overall pool of retirement savings. The PPK/IPK were created under the government’s Capital Accumulation Program, a development plan to improve Poland’s long-term financial stability for both individuals and the economy.

The changes include a government proposal to transfer 75% of plan assets held by OFEs (Otwarty fundusz emerytalny - formerly mandatory, but now voluntary, private pension funds) to a new, simplified version of individual retirement accounts (IKE – Indywidualne Konto Emerytalne and/or IKZE - Indywidualne Konto Zabezpieczenia Emerytalnego) as of 2018. The remaining 25% would be transferred to the reserve fund within social security. The OFEs and the companies that manage them would become investment funds and investment fund companies, respectively, competing in the development of PPK/IPK plans.


The mandate would be rolled out in three phases: January 1, 2018, July 1, 2018 and January 1, 2019, depending on employer size. Proposed rules on auto-enrollment, contribution rates, financial incentives, benefit payments and plan management for the new PPK plans are as follows:


  • Employees aged 19 to 55 would have to be automatically enrolled in a PPK or equivalent plan but could opt out within three months, and those over 55 could enroll voluntarily. (Turkey and the U.K., have both established similar mandates recently.)
  • Establishment of PPK plans would be mandatory for companies with more than 19 employees (unless they already offer a comparable plan).
  • Companies with fewer than 19 employees could opt to provide either a PPK or IPK plan, with the latter intended for small- and medium-sized enterprises.


  • Employee contribution:
    • Mandatory 2% of pay
    • Optional 2% additional after-tax contribution
    • Secondary optional 2% contribution for taxpayers filing jointly, where one member of the household is unemployed, or not in the labor force
  • Employer contribution:
    • Mandatory 1.5% of pay
    • Optional 1% additional contribution
  • Government contribution:
    • .5% of pay (capped at 30 times national average earnings)
    • A one-off PLN 250 “welcome contribution”

Tax Incentives

  • Employer PPK/IPK contributions would be excluded from personal income tax and social security, meaning the employee is not subject to tax on those contributions as a benefit-in-kind. Mandatory employee contributions would be assessed on gross income, prior to social security withholding. Voluntary contributions would be after-tax.
  • Employer contributions would be tax-deductible from corporate income tax.
  • Tax incentives would have to be repaid if the plan was terminated early or savings were withdrawn before retirement.


  • A tax-free lump sum of up to 25% of the account balance could be taken at retirement, and the remainder would be paid as an annuity over the claimant’s lifetime or over a fixed duration at normal income tax rates.
  • Up to 15% of an account balance could be withdrawn in the event of disability.
  • Under certain conditions, members could take a five-year loan from their accounts for first-time home purchases.

Plan Management/Investments

  • Initially, the state-owned Polish Development Fund (Polski Fundusz Rozwoju) would be the default manager of PPK/IPK plans and offer investment funds with profiles matching the retirement age of the beneficiaries (i.e., target date lifecycle investment funds).
  • 24 months from inception, plans would have the free choice of a manager for PPK/IPK plan assets.
  • Total annual product costs would be limited to .6% of the account balance.
  • A simplified registration procedure with the Polish Financial Supervision Authority (KNF) will be created.

Employers that establish a voluntary occupational pension plan under the existing PPE (Pracownicze Programy Emerytalne) employee pension programs framework by January 1, 2018 will be exempt from the requirement to establish a PPK plan. (We would assume that the PPE plan would have to meet the minimum funding requirements for PPK plans.)

The PPK/IPK plans are intended to provide capital for public-sector investment and state-owned industry. The only permissible investments would be financial instruments issued by the government, in contrast to existing arrangements which have no such restrictions.

Draft legislation to implement the proposal must still be submitted to parliament (the Sejm).


Companies with operations in Poland should monitor the proposal for further legislative developments. The proposed measures’ required increased contributions would increase employer costs, so companies may want to review their current plans and review the financial impact of these measures.