The Employee Capital Schemes Act came into force on the 1 January 2019, and will be applied from 1 July 2019.
The purpose of the Act is to create a new, general retirement saving system which will finally, in general, cover all entities that are employers and millions of employees on various types of contracts.
The system will gradually cover all businesses employing:
from 1 July 2019 – entities employing at least 250 people
from 1 January 2020 – entities employing at least 50 people
from 1 July 2020 – entities employing at least 20 people
from 1 January 2021 – other entities from the private sector and state employees
Persons employed on civil law
Members of supervisory bodies
An entity employing at least 250 people will be obliged to create and implement a PPK in the third quarter of 2019. If the PPK is created at the last moment allowed by the act, the first payment to the PPK should be made on the remunerations paid after 12 November 2019. Employers have to budget for an increase in the amount they allocate for remuneration in their budgets for 2019.
Employers who create an employee pension scheme (PPE) within the appropriate parameters will be exempted from the obligation to create a PPK.
Both systems – the PPK and the PPE – have their advantages and disadvantages. However, currently the PPE are more beneficial than the PPK due to a few important reasons. This is an alternative worth considering. Every employer entity should analyse the advantages and disadvantages of both systems not only in the context of the results it wants to achieve, but also the expectations of its staff.
Creation of a PPE, as an alternative for a PPK, takes a minimum of a few months, which means for the largest companies covered by the Act on PPK, 1 July 2019 is the last moment to make a decision and implement the scheme.