Something stirred in PPK. Poles are distrustful but curious

Employee Capital Plans, one of the ways to save for retirement, have not won the hearts of Poles. The Law and Justice government, which introduced this mechanism a few years ago, thought that the vision of increasing the pension through regular payments over several dozen years would make people working full-time and on mandate contracts (PPK does not include entrepreneurs) agree to withholding a small part of their remuneration with the aim of about future benefits. Additionally, bonuses have been added, including: topping up the account of a person joining the PPK.

Why are Poles distrustful of PPK?

However, this did not happen: 3.48 million people out of 17 million professionally active people joined the PPK (although, as we mentioned, this number excludes sole proprietors, i.e. approximately 3 million people). The low popularity of PPK may result from Poles' lack of trust in pension tools: suffice it to say that only 25 years ago, Jerzy Buzek's government carried out a huge pension reform, which included the introduction of OFE.

A dozen or so years later, the dismantling of funds began, which had been planned for several decades and only under this condition could they bring real money. This experience has made Poles distrustful of government pension programs and they trust their own savings in banks, or they buy real estate as their insurance policy for retirement.

20 thousand new PPK accounts

However, something is stirring in PPK: from the latest information bulletin published by PPK we learn that 20,000 people have joined the program within a month. Current participation in the program is 47.05%, with the most dynamic growth in companies employing over 250 people, where it is close to 74%.

One might suspect that the highest share in the largest companies may be related to the fact that large companies pay more than small companies, and therefore it is easier for employees to accept that their remuneration will be reduced for the benefit of the pension plan. People earning the minimum wage have much less flexibility in this regard.

The largest number of people joined PPK in the Masovian (64.9%), Lower Silesian (51%) and Greater Poland (49.3%) voivodeships. The least popular PPKs are in the Świętokrzyskie Voivodeship (26.3%)

Welcome deposits

In May, PPK participants' accounts received PLN 19.6 million in welcome payments. By May 15, PPK participants who met the conditions for receiving this payment in the first quarter of this year received a welcome payment. The funds in this respect went to PLN 78.4 thousand. people.

The right to a one-off welcome payment (PLN 250) is granted to a person who has the status of a PPK participant for at least 3 full calendar months, if during the period of his/her participation in the PPK basic payments were made (i.e. transferred to a financial institution) – financed by the institution – for which at least 3 months.

Within 15 days after the end of the quarter, PFR SA provides the minister responsible for labor with information on the total number of PPK participants who met the conditions for receiving a welcome payment in this quarter. This information is prepared on the basis of data contained in the PPK Register, provided to PFR by financial institutions maintaining PPK accounts. Then, within 30 days after the end of the quarter, the minister responsible for labor issues the welcome payment to the PPK participant via PFR in order to record it in the participant's PPK account. The welcome payment is financed from the Labor Fund.

What is PPK?

PPK is a voluntary and fully private long-term savings system. The funds accumulated in PPK are the private property of participants. The funds accumulated in this program by a PPK participant will be paid to him when he reaches the age of 60 (the same age applies to both women and men; it was introduced in accordance with the principles of equal treatment in relation to voluntary employee pension security systems).

Saving in PPK is voluntary – every employee (and contractor) is automatically enrolled in the program, but can withdraw from it. At the same time, a PPK participant who has resigned from the program may rejoin it at any time.

We write more about the PPK rules below.