You know what they say – it’s never too early to start saving up for your retirement. Still, while you’re busy advancing your career, it’s often hard to focus right on planning its finale, especially with more pressing issues at hand. Fortunately for those of you located in Poland, ensuring your financial stability in retirement will soon become much easier, as the Employee Capital Plan Act comes into force.
The Employee Capital Plans (Pracownicze Plany Kapitałowe) are a long-term, voluntary program designed to ensure better retirement security for future pensioners. Coordinated by the Polish Development Fund, and included within the Poland’s Strategy for Responsible Development, the program will equip each worker with an ECP account set up at a private financial provider. Starting in July of 2019, employers will need to consult the choice with their employees, and set up their accounts. While the participation in the program is optional, the accounts will be set up automatically for all workers under the age of 54 – those who are not interested in this form of savings will need to sign a declaration regarding their withdrawal from the program. Workers above the age of 54 will need to apply manually.
So, how will it work? The savings will come from three sources: the employer, the government, and the employees themselves. First of all, the employer will be tasked with contributing an 1,5% of each worker’s gross wage into the ECP, with the option of increasing this percentage by 2,5%. Additionally, each participant’s ECP account will receive a 250 Zloty starting contribution from the Polish government, followed by a 240 Zloty yearly bonus financed by the Labor Fund. Finally, each participating employee will be required to contribute 2% of their income (or 0,5% for employees with lower income rates) to the account, with the option to increase these contributions by an additional 2%.
Apart from being an additional source of income in retirement alongside a standard pension, the ECP is also considered a private citizen fund, which means it can be inherited, or accessed earlier in special cases. After the account owner turns 60, they gain the possibility to either receive 25% of the sum at once, and divide the rest into monthly installments exempt from capital gains tax, or adjust the received percentage to their needs.
To find out more about the specifics of the program before it comes into force, make sure to visit the Polish Development Fund’s website – as the institution responsible for the coordination of the whole project, they’ve prepared a comprehensive rundown of every aspect of the Employee Capital Plans.
