Update: Overhaul of the Polish pension system is back on the agenda

Poland

The Polish government again has adopted a draft law aimed at introducing fundamental changes to the Polish pension system. The draft law is scheduled to enter into force on 1 January 2020 (initially it was to be 1 November 2019) and to some extent varies from its previous version.

In general, to become binding law the draft law requires three readings by the lower house (pl: Sejm) of the Polish Parliament and then the approval of the higher house (pl: Senat). It must then be signed by the President and, finally, published.

Please note the final wording of the draft law, especially below-mentioned timeframes are still subject to change.

The most important changes to the Polish pension system include:

  • Currently operating pension fund management companies (pl: powszechne towarzystwa emerytalne PTE) that run open pension funds (OFE) and voluntary pension funds (DFE) will be transformed into investment fund management companies (pl: towarzystwa funduszy inwestycyjnych – TFI). In turn, both OFE and DFE will be changed into specialist open investment funds (SFIO). The transformation will take place on 29 May 2020.
  • Members of the management/supervisory board of a PTE who do not meet the relevant requirements set out for management/supervisory board members of a TFI may hold their functions in the TFI post transformation, but only until 31 December 2020 (subject to a written notification to the Polish Financial Supervision Authority - “PFSA” by 30 June 2020). 
  • The draft law does not provide for a ‘phasing- in’ period for PTE transformed into TFI to adapt to the new regulatory requirements for TFI. This means that the transformed entity will need to comply with them from day one (i.e. 29 May 2020). However, if PTE notifies PFSA (by 28 May 2020) about its intention to merge post transformation with another (existing) TFI (which may be the case of these capital groups who already have a TFI in their Polish structure) – the TFI transformed from a PTE does not need to comply with the requirements set out normally for TFI regarding their organisation and manner or conditions of conducting business (barring some exceptions) until the completion of that merger (but not longer than 31 December 2020).
  • The net assets accumulated in OFE will be transferred to individual pension accounts (indywidualne konta emerytalne IKE) maintained in SFIO. According to the draft law, this is the default option. However, it will be possible for an OFE member to submit a declaration about his/her transferring to the Polish Social Insurance Institution (ZUS). If this option is chosen, a conversion fee (as mentioned below) will not be charged but future pension payments will be subject to income tax;
  • A conversion fee will be charged on the funds transferred from OFE to the IKE amounting in total to 15% of the value of these funds.
For more information, please contact one of the following local CMS experts: Ewa Świderska and Marta Szwarczyńska.