Employee capital plans

The Polish government is currently working on a bill on Employee Capital Pensions Schemes (ECPS) (in Polish: Pracownicze Plany Kapitałowe), designed to encourage working Poles to make long-term savings intended to be an additional source of income after reaching retirement age. On May 25, 2018, following initial consultations and arrangements, the Ministry of Finance submitted an updated bill, originally published in February this year, for final public consultation. Although it was expected that ECPS would not be launched on January 1, 2019 (as originally envisaged) and that the first contributions would be paid by only the largest employers on July 1, 2019 at the earliest, the updated bill, however, provides that the Act will already be applicable as early as January 2019.

BASIC PRINCIPLES

Employee Capital Pension Schemes will cover not only employees, but also contractors. The scheme is to cover all working Poles up to 70 years of age, in principle regardless of the legal basis for their employment, as long as the given individual’s remuneration is subject to social security contributions. According to the Ministry of Finance, the scheme will be aimed at around 11 million Poles – 9

million from the business enterprise sector and 2 million from the public sector. In principle, the ECPS will be voluntary; however, every worker under the age of 55 will be understood to have implicitly

consented to enrolment and will participate in the scheme unless they specifically express a wish to opt out. In the case of individuals over 55 years of age, the hiring entity may execute an ECPS agreement for them only upon the given person’s explicit request.

AGREEMENTS WITH FINANCIAL INSTITUTIONS

The legal structure of the ECPS is to be based on a management agreement entered into between a hiring entity and a financial institution (selected in consultation with the internal trade union organization or with employee representatives) and on agreements to operate an ECPS, to be executed by the hiring entity for and on behalf of each worker. The hiring entity will be obliged to conclude an agreement for the operation of ECPS for each worker following the third month of starting work, no later than by the tenth day of the month following that in which the three-month period of work will have expired. If this obligation is not fulfilled, a legal fiction will be applied, namely that the ECPS agreement between the worker and the financial institution is executed on the first day following the end of the said time limit, on the terms and conditions as set out in the ECPS agreement between this institution and the hiring entity.

WHO AND WHEN

According to the bill, the ECPS is to be incrementally phased in, depending on the size (or type) of the hiring entity. The plan is to be initially joined by companies employing at least 250 people – who will have to implement the Act as early as from January 1, 2019. In subsequent six-month intervals, the following entities are to participate in the program: those with 50 to 249 workers (from 1 July 2019), companies with 20 to 49 workers (from 1 January 2020), and finally (from 1 July 2020) the smallest companies and public sector entities.