PPK in Poland: Employee Capital Plans for Foreign Employers

Employee Capital Plans, known as PPK, are a statutory long-term savings scheme financed jointly by the employee, employer and the Polish state. For a PPK Poland employer, the scheme is not voluntary at organisational level. An employing entity that falls within the statutory definition must establish PPK arrangements, enrol eligible persons and calculate contributions through payroll, unless a specific statutory exclusion applies. [1]

For foreign employers operating in Poland, PPK should be assessed early – preferably during entity formation, workforce onboarding or a payroll-provider transition. Errors may affect payroll costs, employment documentation, compliance reporting and the company’s relationship with employees.

 

Which entities have employee capital plans Poland obligations?

The PPK Act applies to an “employing entity” which employs at least one “employed person” within the meaning of Article 2(1)(18) of the Act on Employee Capital Plans. The definition is broader than a standard employment contract. It can cover, among others, employees, persons working under agency or mandate contracts, and members of management or supervisory bodies receiving remuneration, provided that they are subject to mandatory Polish pension and disability insurance. [1]

PPK for foreign employees Poland is therefore not determined solely by nationality, residence or the language of the employment contract. The key question is whether the individual is covered by the relevant Polish social insurance rules. This requires particular attention in cross-border assignments, remote-work structures and contracts involving non-Polish entities.

Persons aged 18 to 55 are generally enrolled automatically after three months of employment. Persons aged 55 to 70 may join upon their request. Persons aged 70 or above cannot join PPK. The three-month period is calculated under Article 16 of the PPK Act and may include certain prior periods of employment with the same employing entity. [1]

 

Three statutory exceptions from PPK implementation

Article 13 of the PPK Act provides three important exclusions. They should be reviewed carefully, because the conditions are cumulative and the factual position must be documented.

• A micro-entrepreneur within the meaning of Article 7(1)(1) of the Entrepreneurs’ Law is excluded if all employed persons have submitted declarations on not making PPK payments. If even one eligible person does not submit such a declaration, the exclusion cannot be relied upon. [1][2]
• A natural person is excluded where that person employs another natural person for purposes unrelated to the employing person’s business activity, and the employment is also unrelated to that activity. This exclusion will not usually apply to a company or to staff supporting a business operation.
• An employer operating an Employee Pension Scheme, known as PPE, may be excluded if, on the statutory reference date, it operated PPE, paid a basic contribution of at least 3.5% of remuneration, and at least 25% of employed persons participated in that scheme. [1][3]

 

PPK contributions rates and payroll treatment

The standard employee contribution is 2% of remuneration, while the employer’s mandatory contribution is 1.5%. Both parties may make additional contributions: up to 2% for the participant and up to 2.5% for the employer. The employee’s basic contribution may be reduced to not less than 0.5% where remuneration does not exceed 1.2 times the minimum wage. [1]

Employer-funded PPK payments are generally taxable employment income for the participant under Article 12(1) of the Personal Income Tax Act. However, they are excluded from the basis for Polish social insurance contributions under the applicable social insurance regulation. Payroll systems must therefore apply different treatment for income-tax and social-insurance purposes. [4][5]

 

PPK financial institution agreement and employer documentation

The employer must select an authorised financial institution and conclude a PPK management agreement. The selection should be made in agreement with the company trade union organisation or, where none operates, with employee representatives selected in the adopted procedure. The statutory selection criteria include the institution’s conditions, efficiency in managing assets, experience and the interests of employed persons. [1]

The employer then concludes a PPK financial institution agreement for maintaining PPK on behalf of and for each eligible participant. In practice, a foreign employer should align the PPK process with onboarding, payroll cut-off dates, data-protection procedures and internal communications. The employer also needs a reliable process for recording opt-out declarations and contribution changes.

 

PPK opt out declaration and automatic re-enrolment

Participation is voluntary for the individual. An employee may submit a written PPK opt out declaration using the statutory form. The employer must then stop making contributions from the month following receipt of the declaration, subject to the rules in Article 23 of the PPK Act. [1][6]

Opt-out is not permanent. Every four years, the employer must resume contributions from 1 April unless the participant submits a new declaration. The next statutory automatic re-enrolment date is 1 April 2027. Employers should communicate this process in advance and avoid any wording that could be viewed as encouraging employees to resign from PPK participation.

 

Compliance risks for foreign employers

Failure to conclude a PPK management agreement on time may result in a fine of up to 1.5% of the employer’s remuneration fund from the preceding financial year. The same maximum penalty may apply to unlawfully inducing a person to resign from saving in PPK. These sanctions are set out in Articles 106 and 107 of the PPK Act. [1]

This is informational material, not legal advice. The required PPK structure depends on the employer’s Polish insurance position, workforce model and existing benefit arrangements.

 

For a practical review of PPK obligations and payroll risk in Poland, contact Lawyersinpoland.com by Kopeć & Zaborowski.

 

FAQ – PPK in Poland: Employee Capital Plans for Foreign Employers

Does every Polish company have to implement PPK?

Generally, yes, if it employs at least one person covered by the PPK Act and no Article 13 exclusion applies.

Are foreign nationals enrolled in PPK?

They may be enrolled if they meet the statutory definition of an employed person, particularly where they are subject to mandatory Polish pension and disability insurance.

What are the standard PPK contributions rates?

The standard rates are 2% from the employee and 1.5% from the employer, with optional additional payments available for both parties.

Can an employee refuse PPK participation?

Yes. The employee may file a written PPK opt out declaration. The declaration must be renewed after automatic re-enrolment if the employee wishes to continue opting out.

Does an employer pay PPK contributions for a person aged over 55?

Only if that person requests enrolment before reaching 70 years of age and meets the relevant statutory conditions.

Can a foreign employer use its existing pension plan instead of PPK?

Only a PPE meeting the precise conditions in Article 13 of the PPK Act may create an exclusion. A foreign retirement plan does not automatically replace PPK.

 

Bibliography

[1] Act of 4 October 2018 on Employee Capital Plans, consolidated text: Journal of Laws 2024, item 427.

[2] Act of 6 March 2018 – Entrepreneurs’ Law, consolidated text: Journal of Laws 2024, item 236.

[3] Act of 20 April 2004 on Employee Pension Schemes, consolidated text: Journal of Laws 2024, item 556.

[4] Act of 26 July 1991 on Personal Income Tax, consolidated text: Journal of Laws 2025, item 163.

[5] Regulation of the Minister of Labour and Social Policy of 18 December 1998 on detailed rules for determining the basis for retirement and disability insurance contributions.

[6] Regulation of the Minister of Finance of 12 June 2019 on the declaration on resigning from making payments to Employee Capital Plans.