The government unveiled its draft amendment on the Act on Employee Capital Plans (Polish acronym: PPK, further referred to as the PPK Act) on March 7, 2019. It changes the basis for calculating the PPK payments due. As a result, PPK operating costs may increase.
What are the changes?
Currently, PPK contributions are calculated on the basis of the remuneration of the given PPK participant which constitutes a basis for that participant's pension and disability insurance contributions. As a result, PPK payments are subject to a cap of 30-times the average remuneration. In practice, it means that PPK payments for the highest earners are made only up to the annual remuneration level – which in 2019 is PLN 142,950 (approx. EUR 33,245).
The amendment to the PPK Act changes the definition of remuneration. Under the draft amendment, the thirty-fold average remuneration limit will not apply to PPK contributions. This means that such payments will be calculated on the basis of the full remuneration of the PPK participant.
Effects for employing entities
The planned change will result in increased PPK-related costs. The waiver of the thirty-fold average remuneration limit will result in the employing entity having to make PPK contributions based on the full remuneration of the highest earners, and not merely on the capped amount.Thus, higher remuneration will result in higher PPK payments.
The stage of the legislative process
Currently, the draft amendment to the PPK Act is being consulted with social partners. After its completion, it will be put before Parliament. We will follow the amendment process and keep you informed.
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