CMS Expert Guide to Pensions in Poland

The Polish pension system is a three‑pillar system. The first pillar is a mandatory pay‑as‑you‑go scheme administered by the state Social Insurance Institution (Zakład Ubezpieczeń Społecznych – ZUS) and provides a relatively low level of pension based on the total amount of contributions transferred during an individual’s career and allocated to that individual’s account. The second pillar is also mandatory, but the contributions may either be administered entirely by ZUS (sub‑account) or, upon request, part of the contributions may be transferred to a chosen private open pension fund (OFE). The third pillar consists of optional private pension schemes. Both the second and third pillars generally operate on a defined contribution basis.

Second‑pillar Open Pension Funds (OFE) are established and managed by licensed and highly capitalised private pension fund companies. Members have a percentage of their social security contributions diverted to an OFE of their choice, which then invests those contributions. As of 2025, the portion of the social security contribution allocated to OFE remains at 2.92% of gross monthly remuneration.

Third‑pillar schemes consist of occupational and individual (personal) pension schemes.

Occupational pension schemes are set up by an employer. There are two main types of occupational pension schemes: (1) employee pension scheme (PPE) and (2) employee capital plan (PPK). Membership of such schemes is based on an agreement between the employer and employees’ representation (e.g., trade unions) and an agreement between the employer and the selected financial institution.

Individual pension schemes are individual agreements with life insurance companies, banks, investment companies or entities providing brokerage services. The benefits provided by individual pension schemes depend on the type of scheme chosen by an employee (e.g., life insurance, bank account, mutual fund). There are two main types of individual pension schemes: (1) individual pension account (IKE) and (2) individual pension insurance account (IKZE).

Second pillar Open Pension Funds (OFE) are established and managed by licensed and highly capitalised private pension fund companies. Members have a percentage of their social security contributions diverted to OFE of their choice which then invests them. As of 2025, the portion of the social security contribution allocated to OFE remains at 2.92% of gross monthly remuneration.

Third pillar schemes consist of occupational and individual (personal) pension schemes.

Occupational pension schemes are set up by an employer. There are two main types of occupational pension schemes: (1) employee pension scheme (PPE) and (2) employee capital plan (PPK).Membership of such schemes is based on an agreement between the employer and employees’ representation (e.g. trade unions) and an agreement between the employer and the selected financial institution.

Individual pension schemes are individual agreements with life insurance companies, banks, investment companies or entities providing brokerage services. The benefits provided by individual pension schemes depend on the type of scheme chosen by an employee (e.g. life insurance, bank account, mutual fund). There are two main types of individual pension schemes: (1) individual pension account (IKE) and (2) individual pension insurance account (IKZE).

Transferring part of the contribution to an OFE is currently voluntary for all individuals. If no declaration is submitted, the entire mandatory contribution (both first and second pillar) is administered by ZUS.

The third pillar of the pension system consists of occupational (PPE, PPK) or individual (IKE, IKZE) pension schemes. Participation in these schemes is not mandatory for employees.

While the opening of a PPE by an employer is voluntary, PPK is mandatory. The employer must enter into PPK agreements, but the employee can opt out of the programme.

Transferring a part of a contribution to OFE is currently voluntary for all individuals. If no declaration is submitted, the entire mandatory contribution (both first and second pillar) is administered by ZUS.

 The third pillar of the pension system consists of occupational (PPE, PPK) or individual (IKE, IKZE) pension schemes. Participation in these schemes is not mandatory for employees.

While the opening of PPE by an employer is voluntary, PPK is mandatory. The employer must enter into PPK agreements, but the employee can opt out of the program.

Only open pension fund companies can establish OFE.

In general, banks and insurance companies control open pension fund companies. The founders are required to obtain a licence from the Polish Financial Supervision Authority (PFSA).

Occupational pension schemes are set up by an employer.

Individual pension schemes must be set up by life insurance companies, banks, investment funds, pension funds or brokerage companies.

Only pension fund companies can operate OFE.

Occupational pension schemes are based on a contract entered into by an employer with an insurance company (group life insurance contracts), an investment fund, an employee pension fund or a foreign entity entitled to operate pension schemes incorporated in the European Union.

Individual pension schemes are operated by life insurance companies, banks, investment funds, pension funds or brokerage companies.

The total mandatory contributions for pension insurance (first and second pillar) amount to 19.52% of the gross monthly remuneration. However, the annual basis for calculating pension contributions cannot exceed a statutory threshold (PLN 260,190, approximately EUR 61,000 in 2025).

The mandatory monthly level of contributions for the second pillar amounts to 7.3% of gross monthly remuneration. Of this, 2.92% of gross monthly remuneration may be transferred to an OFE of the individual’s choice. Otherwise, the entire 7.3% is administered by ZUS.

If employers establish a PPE, they are obliged to contribute to it, but employees cannot be required to make contributions. Total employer contributions cannot be higher than 7% of the gross remuneration of participating employees. The participating employee may declare additional contributions, provided the agreement on creating a scheme does not prohibit it. There are, however, separate limits for employee contributions.

In the case of PPK, the employer’s contribution is at least 1.5% and no more than 4% of the employee’s gross monthly remuneration. The employee’s contribution is 2% (which may be increased up to 4%) of their gross monthly remuneration, unless their total remuneration from different sources in a given month is less than 1.2 times the minimum wage, in which case it can be decreased to no less than 0.5%.

Annual contributions to an individual pension scheme vary depending on whether it is IKE or IKZE. For IKE, the annual limit in 2025 is PLN 26,019. For IKZE, the annual cap in 2025 is PLN 10,407.60 (PLN 15,611.40 for persons conducting non‑agricultural business activity).

No, although there are minimum capitalisation requirements.

7. What age are benefits taken?

The retirement age is 60 years for women and 65 years for men. Earlier retirement is possible, due to ‘bridging pensions’, which are designed for people performing special types of work. A member of PPE, PPK or IKE may request payment of the retirement benefit at age 60 or, in the case of PPE and IKE and provided that certain statutory conditions are met, 55. Additionally, in the case of PPE the payment takes place automatically if the participating employee reaches the age of 70 and they have not applied for the payment beforehand.

In the case of IKZE, benefits are taken at age 65, provided that payments were made to the IKZE for at least five calendar years.

In the second pillar, the members bear the costs. The maximum level of certain costs is determined by law. In the case of occupational and individual pension schemes, who bears the costs depends on the design of the scheme.

Each taxpayer must have a tax identification number.

In the second pillar, contributions are not subject to personal income tax.

In the third pillar, contributions are paid from post‑tax income; however, contributions made to IKZE may be deducted from taxable income.

Investment returns from both individual and occupational pension schemes are exempt from personal income tax. However, withdrawals from IKZE are subject to a flat tax of 10% of the total amount (contributions paid and profits earned).

In addition, the withdrawal of funds by a member of IKE before age 60 (or, under certain conditions, 55) is subject to personal income tax (19%). Earlier withdrawals from IKZE are also subject to personal income tax.

12. Are benefits taxed?

Pension benefits paid from the second pillar are subject to personal income tax at progressive rates up to 32%.

Benefits paid under the third pillar are free from personal income tax. However, in the case of an individual pension scheme this exemption does not generally apply if the member was in more than one such scheme.

In addition, withdrawals from IKZE are subject to a flat tax of 10% of the total amount (contributions paid and profits earned).

Pension benefits in the second and third pillars are exempt from inheritance tax.

Contributions paid by the employer to PPE are tax‑deductible but are not added to the member’s remuneration, which is the basis for the calculation of mandatory social insurance.

The state makes contributions to the funds accumulated under the PPK in the amount of PLN 250 (approximately EUR 58) as a welcome bonus and PLN 240 (approximately EUR 55) annually. 

Please see above.

The regulator is the PFSA. The PFSA has extensive powers to check whether pension funds and pension schemes comply with Polish law. In addition, the State Labour Inspectorate can also check whether employers follow mandatory rules regarding PPK.

Pension providers have extensive statutory obligations to provide information. In addition, the PFSA may require them to provide specific information or documents whenever it considers it necessary for supervision purposes. The State Labour Inspectorate obtains information by conducting inspections.

To a limited extent, the PFSA supervises failed or insolvent funds and schemes. In the case of individual pension schemes, there is an Insurance Guarantee Fund and a Bank Guarantee Fund that, in certain events, compensate participants of pension schemes operated by insurance companies or banks.

Discrimination on grounds of age, sex, sexual orientation, disability, race, origin, religion, part‑time and fixed‑term working is not permitted.

In the second pillar, it is not possible to leave a pension fund before retirement age.

In the third pillar, employees can choose to participate. They can stop participating in PPK, IKE and IKZE at any time. Employees can leave the PPE earlier only if the PPE is closed. However, if a member withdraws earlier, they may lose their tax benefits. In the case of PPE and individual pension schemes, a participant leaving the scheme early may request that funds be transferred to another pension scheme. In such a case, the amount paid out is subject to personal income tax.

Employers who want to join the PPE must first conclude a company agreement with trade unions or other employee representation.

In the case of PPK, an agreement with trade unions is not required, but the employer must agree with them on the choice of financial institution. The employer chooses the financial institution if no agreement is reached.

If an employer wants to join the PPE and there are no trade unions at the company, the employer must conclude a company agreement with employee representatives. Employee representatives are selected in accordance with the procedures established by the employer. After concluding an agreement with the employee representative body, the employer may conclude an agreement with a financial institution.

In the case of PPK, if there are no trade unions at the company, the employer must agree with employee representatives on the choice of financial institution. The employer chooses the financial institution if no agreement is reached.

Foreign entities are allowed to carry out activities in the field of private pension plans, but they must comply with certain conditions in order to do so. Pension providers may invest in foreign assets, but such investments are limited.

In the second pillar, members of open pension funds may decide every four years, starting in 2016, whether to transfer their contributions to an open pension fund or to the ZUS sub‑account.

In the case of individual plans, switching plans is possible only after the current plan is closed. The exception is IKE, which allows transferring funds to PPE.