PPK debut in Polish pension system - results of a survey conducted by Mercer


At the end of 2019, Employee Capital Plans finally made their debut in the Polish pension system.

Mercer has conducted a survey concerning key aspects of functioning of the PPK system. The responses have been collected in the period between 18th of November and 4th of December. The objective was to explore the opinions of employers on the process of implementation of the PPK in companies with more than 250 employees. The survey has been designed to collect opinions of employers regarding the PPK reform, the process of its implementation in their respective companies, but also to estimate the share of employees who opted out from the PPK (the survey could only cover the opt out declarations submitted until the end of November 2019). In total, 162 companies have participated in the survey, 132 of them have been involved in implementation of the PPK in their company. The research covered 16 questions with an option to leave a comment. Interestingly, the rate at which comments were submitted was remarkably high, especially for this type of surveys. This suggests that there is wide interest in the PPK system, it also shows that this issue is important for the Polish companies and that the employers believe their voice is important and should be heard.

Most participants, a total of 56 companies (58% of participants) believe that the process of selection of the financial institution is complex (degree of complexity in these cases was rated at 4 and 5 on a scale of 1 to 5). In the comment section, the respondents indicated most commonly that the comparison of the offers submitted by the financial institutions and the selection of financial institutions themselves is especially time-consuming and complex. Cooperation with the Employees’ Representatives (trade unions) is an aspect of PPK implementation that a vast majority of employers had no issues with. 40 companies (which accounts for 42% of respondents) believe that it is a relatively simple task (rated the rate of complexity either 1 or 2 on a scale of 1 to 5). Only 12 employers (13%) found this aspect to be a complex process.

Opposite to another aspect of PPK Implementation, which is PPK contract negotiation – a large group of employers - 42 companies (45% of respondents) find contract negotiation to be a complex, cumbersome and time-consuming task. These three adjectives are the ones most commonly used to describe this aspect of implementation in the comment section. Only 30 employers rated this task as relatively easy (rated it at 1 or 2 on a scale of 1 to 5).

In addition, 34 companies (37% of respondents) have indicated that employers’ obligations in the scope of communication as being complex. 26 employers (29%) perceive PPK communication as relatively easy. The most commonly identified obstacles in this scope are: employees’ reluctance to participate in the PPK, the need to respond to questions that undermine the validity of the PPK (especially in the context of negative experiences with OFE), concerns about investment of the PPK assets on the financial market (concerns about safety of assets) and finally - the complex nature of the PPK itself.

PPK administration seems to have prime importance for the respondents. This is evidenced by the highest rate of comments made in response to the survey’s question on this issue – in total 40 comments were made. The vast majority of participants – 68 companies (73% of respondents) have identified PPK administration as a complex process. This is confirmed by most comments, which mainly focus on technical problems connected with PPK administration. Most common ones include: complexity of requirements, lack of compatibility with standard payroll systems and processes, as well as lack of confidence as to whether the administrative obligations are fulfilled properly. It is worth to note that only in case of 5 companies (5% of respondents) the PPK administration is seen as a relatively simple task.

In the survey we have also asked some questions regarding clarity of legal framework – below we present participants’ opinions:

1.Provisions of the Act on PPK and the obligations of the employer

The second least favorably rated aspect of the reform, as 45% of respondents rated it negatively.

2.The conditions that warrant the security of assets accrued on the PPK accounts

Only 22% of respondents identified this aspect of the reform as being clear and sufficient.

3.Obligations of the employer in the scope of communication

It is the only neutrally perceived aspect of the PPK, as 41% of respondents identified it as being sufficient.

4.Rules and manner in which contributions to the PPK are calculated 33% of respondents have identified this aspect of the PPK as being clear and sufficient.

5.Conditions form making payments’ corrections in case of opting out of the PPK

The least favorably rated aspect of the reform – 55% of negative responses.

6.Fulfilment of requests (statements of will) made to the employers by the employees

Roughly the same share of employers view this aspect positively (28%) and negatively (29%); interestingly – there was a high share of neutral responses in regards to this aspect (35% of respondents).

There were also some questions regarding the support which have been provided to employers by the government and financial institutions. As far as the government support is concerned, there were only 13 responses (14% of respondents) that indicated the support of the governmental authorities to be helpful. On the other hand, 32 companies (34%) indicated that this support was insufficient and not helpful. 27 responses rated the support neutrally (3 on a scale of 1 to 5), while in 22 cases the respondents were unable to give a definite answer. The same time, support provided by the financial institutions seems to be highly regarded. Vast majority of respondents – 65 companies (69%) believe that this support is helpful. Only 9 companies (10%) have rated the support as being insufficient and not helpful.

The survey’s result seems to confirm official data presented by the Polish Development Fund (PFR) on the rate of participation in the PPK. In total, 1.1 M Poles have become participants of the PPKs. This amounts to about 39% of all individuals eligible for participation. Mercer found that the most common level of participation among the respondents was 41 to 50% (this was the level indicated by 22 companies, or 24% of respondents). 45% of survey’s participants indicated participation level to be less than 40%, while 32% (29 responses) indicated the participation level to be higher than 65%. Shortly after initial estimations of participation have been made public, several experts in the field expressed their surprise with its (potentially) low level. Several financial institutions, based on their own data, reported that their expected average participation was at 25-35%. At this point numerous voices stated that it would be very hard to reach the participation of 40% or higher. However, this grim scenario never occurred. The official participation in the PPK immediately after the employers have launched their PPKs was estimated to be 39%. Nevertheless, it is worth to note that this value takes into account the resignations from participation submitted only until the end of November 2019, in other words – up to the point when the PPKs were to be launched. As employees receive information on deduction of advance payment for personal income tax (PIT) and deductions caused by employees’ contributions to the PPK, one should expect that some of them will decide to opt out from participation.

The PPK reform is another change in the Polish pension system. Unlike several less important, the PPK reform has a chance to significantly and positively change our pension system.

We kindly invite you to participate in a web seminar which will be held on the 5th of February 2020 at 11:00 am and shall focus on the results of the survey and conclusions that can be drawn from them. Read more

The seminar will be held in Polish.

Krzysztof Nowak

Mercer Polska

14 January 2020