Open pension funds are going to be canceled in Poland

Poland is in the anticipation of new pension reform - the government plans to cancel Open Pension Funds (OFE). This will completely transform the existing retiring system and its current model will be over.

The reform of 1999 had a purpose to become a platform for the new pension system. Millions of Poles were supposed to deposit part of their income and use it in the elderly age.  Now the government has decided to try a different approach to this matter. So, what will happen to the funds which have been already accumulated on the current pension accounts?

Prime Minister of Poland, Mateusz Morawiecki, has disclosed the plan of moving to a new system. For today Open Pension Funds have generated nearly 160 billion zlotys. These funds will be relocated while the accounts are going to be closed. Polish people themselves will decide the future fate of these assets according to the government.

The money will be transferred either to Individual Pension Accounts (IKE) or as they call them voluntary retiring savings or the funds can be transferred to Social Insurance Institution (ZUS). If a citizen chooses the IKE option, the fee is going to be 15%. The fee is reasoned by free from tax system of IKE accounts. In case the funds are relocated to ZUS, all the money will be 100% private and allowed to inherit.

The lawyers are working on relevant regulations. The plan is to implement the reform at the beginning of 2020. According to the experts' estimation, the majority of the funds will be moved to IKE accounts. So, the budget of the country is expecting to gain 19 billion PLN in the result of the above-mentioned fee, which will be applied for a preferred option of money relocation.

Poland Business News