Employer action code: ACT
Legislation requiring employers to establish, automatically enroll staff into, and contribute to a new defined contribution (DC) retirement plan (PPK - Pracownicze Plany Kapitalowe) was signed into law on November 19, 2018.
- The mandate will apply from July 1, 2019, for companies with 250 or more workers (as of December 31, 2018) and will be extended in phases (based on employee head count six months prior) to all companies by 2021. Companies will have close to 90 days after their scheduled implementation date to conclude the contract for managing the PPK.
- Employees age 19 to 55 with at least three months of service will have to be automatically enrolled. New hires will have to be added within three months of starting work. Participation will be voluntary for employees age 56 to 70.
- The PPK requirement will be waived for companies that already offer a qualified DC PPE retirement plan (Pracownicze Programy Emerytalne) prior to application of the PPK mandate, provided the employer contributes at least 3.5% of pay to the PPE and at least 25% of the enterprise workforce is covered by the PPE.
- PPK contributions: Employees: mandatory minimum contribution of 2% of pay (0.5% for employees earning up to 1.2 times the minimum wage) with the option to contribute up to an additional 2% of pay
- Employers: mandatory minimum contribution of 1.5% of pay with the option to contribute up to an additional 2.5% of pay (different additional contribution rates based on years of service will be permitted)
Companies that have not already done so should analyze and decide whether they want to try to obtain regulatory approval and set up a PPE before the applicable PPK implementation deadline. The two types of plans are similar in certain respects, but there are also some significant differences that may make PPEs more attractive for some employers.
Further details and a comparison of PPK and PPE features, including advantages/disadvantages, can be found here.