The rules for granting pension benefits are defined by the provisions of the Act of 17 December 1998 on old-age pensions and disability pensions paid from the Social Insurance Fund (Journal of Laws of 2015, item 748, with amendments). This Act sets out the terms of acquisition of the entitlement to cash benefits from old-age and disability insurance, the principles of determining the amount of benefits, as well as the principles and procedure of awarding and payment of benefits. The conditions for obtaining old-age pension and determining its amount depend on which age group the person insured belongs to.
Contributions to the old-age pension insurance are financed by insured persons and by contribution payers from their own resources in equal parts – 9.76 per cent of the basis of contribution (19.52% in total). The contribution is calculated on the basis of a contribution rate not exceeding a 30-fold average remuneration in a calendar year. When the basis of contribution rates, paid by the insured person, exceeds the amount of a 30-fold average remuneration in a calendar year concerned, the pension insurance contribution is not collected in the subsequent months of that calendar year.
On 1 January 1999 a new old-age pension scheme came into force. The essential objective of the revision of the existing regulation was to ensure that the future pensioners would receive their pensions from at least two sources, i.e. from the Social Insurance Institution (ZUS) and from open pension funds (OFE). Since 1999 two old-age pension schemes have been jointly in operation:
1. for persons born before 1 January 1949 – pension scheme operating under the earlier rules, and
2. for persons born after 31 December 1948 – pension scheme operating under the new rules.
The right to an old-age pension under the old rules is exercised by person born before 1 January 1949 who have reached the statutory retirement age, which is 60 years for women, and 65 years – 65 years and 4 months (depending on the date of birth) for men, and have completed the required contributory and non-contributory period, which amounts to at least 20 and 25 years respectively.
The scheme provides for pensions with shorter period of coverage at the statutory retirement age (at least a 15-year contributory and non-contributory period for women, and at least a 20-year for men). However, the old-age pensions with shorter period of coverage are not subject to any increase to bring their amount up to the level of the minimum benefit. Old-age pension calculated in the old scheme amounts to:
1. 24% of the base amount,
2. 1.3% of the assessment basis for each contributory year, and
3. 0.7% of the assessment basis for each non-contributory year.
The base amount equals 100% of the average remuneration from the preceding calendar year, reduced by the compulsory social insurance contribution deducted from the earning of the persons insured. This is fixed from 1 March of each year. The benefit is assessed based on the average assessment basis of a contribution to social insurance, from the period of 10 consecutive calendar years selected from among the most recent 20 years or from 20 calendar years chosen from the whole insurance period.
Old-age pension scheme under the new rules is composed of three pillars. First and second pillar are universal and compulsory. First one is managed by the Social Insurance Institution, while second pillar is composed of two parts: open pension funds, which are managed by private financial institutions, and a sub-account managed by ZUS. Before 1 February 2014 participation in OFE had been compulsory for persons born after 31 December 1968. From 2014 the funded tier became voluntary – all members of OFE had a choice whether to pay their contributions partially to open pension fund, or direct entire 2nd pillar contribution to sub-account in ZUS. These persons remain the members of open pension funds but new contributions are not transferred into their accounts in funds. Only new-entrants to the labour market are about to choose where to become the member of open pension fund or not. Third pillar is administered by private institutions and it consists of three elements: occupational pension programmes, individual retirement accounts and individual pension security accounts. Affiliation with third pillar is voluntary.
In the case of those, who are members of open pension funds and submitted a statement of contributions transfer to OFE, the Social Insurance Institution transfers a part of the their contribution (2.92%) to the open pension fund selected by the insured person. If the insured person has not submitted such a statement, his or her full contribution equal to 7.3% is credited to the sub-account managed by ZUS.
The right to the old-age pension under the new rules within the universal old-age pension scheme (first and second pillar) is exercised by persons born after 31 December 1948 who have reached the statutory retirement age. The retirement age is different for men and women and it is specified under the article 24 of the Act on old-age pensions and disability pensions paid from the Social Insurance Fund. It depends on the date of birth of person insured.
Starting from 1 January 2013 the retirement age is being gradually increased (for women born after 31 December 1952 and men born after 31 December 1947) and – as a target – equalized starting from the level 60 for women and 65 for men. Every 4 months the age is increased by 1 month to reach the level of 67 for both men and women (in 2020 and 2040, respectively).The retirement age of 67 years is applicable to woman born after 30 September 1973 and men born after 30 September 1953.
An old-age pension is based on the close correlation of the benefit amount with the amount of contribution actually paid. The amount of an old-age pension received from ZUS is the equivalent of the total amount of contributions after indexation collected after 31 December 1998 and the amount of the indexed initial capital divided by the average life expectancy for persons in the age equal to the retirement age of the given pension claimant, expressed in months.
The initial capital is calculated for each person who had been paying – before 1999 – a contribution to social insurance or for whom such a contribution had been paid by the contribution payer. The amount of the initial capital is credited to insured person’s account and is subject to annual indexation up to the moment of retirement.
There is no minimum insurance period to claim a pension, but there is a minimum insurance period requirement in order to be covered by the minimum pension guarantee (25 years for men and 21 years for women, increasing by 1 year every two years to reach 25 years in 2022).
The Act on old-age pensions and disability pensions paid from the Social Insurance Fund allows people born after 31 December 1948 who have not reached the statutory retirement age, to take advantage of the so-called partial old-age pension. They may acquire the right to an old-age pension as soon as they jointly meet two conditions, namely: they have reached the age of at least 62 years for women and 65 years for men, and they have completed the required contributory and non-contributory period, which amounts to at least 35 and 40 years respectively. The amount of partial pension equals 50% of the old-age pension calculated according to the general rules.
Specific regulations apply to persons born after 31 January 1948 who have been employed in special conditions or have performed work of special nature. They have the right to retire before reaching the statutory retirement age. There are two categories of earlier retirement specified in polish law.
Under the Act on old-age pensions and disability pensions paid from the Social Insurance Fund the right to an earlier pension is granted to employees, who have completed at least 20-year for women and 25-year for men of contributory and non-contributory period, including at least 10 or 15 years of work in special conditions, or of work of special nature. Those who meet these conditions may retire at the age defined for particular occupational groups under Regulation of the Council of Ministers of 7 February 1983 on the retirement age of employees working in special conditions or performing work of special nature (Journal of Laws No 8, item 43, with amendments). An earlier pension granted for work in special conditions or for work of special nature may be acquired by the employees, who on 1 January 1999 met the conditions required for the contributory and non-contributory period, including the above mentioned period of work in special conditions or of work of special nature.
Special regulations are stipulated under the Act of 19 December 2008 on the bridging old-age pensions (Journal of Laws of 2015, item 965, with amendments). As from 1 January 2009 the right to a bridging old-age pension is acquired by insured persons born after 31 December 1948 who meet jointly the following conditions:
1. have completed a period of employment in special conditions or of a special nature of at least 15 years;
2. have reached at least the age of 55 years for women and 60 years for men;
3. have completed the contributory and non-contributory period of at least 20 years for women and 25 years for men;
4. before 1 January 1999 performed work in special conditions or of a special nature;
5. after 31 December 2008 performed work in special conditions or of a special nature;
6. have terminated their employment relationship.
The right to a bridging old-age pension expires on the day preceding the day of acquiring the right to an old-age pension, and if the person concerned is not entitled to an old age pension – on the day preceding the statutory retirement age.
Pension payments are adjusted annually (on 1 March) according to the consumer price index of the households of pensioners (or the general consumer price index, if it is higher than the index for the households of pensioners), increased by at least 20% of real growth of average earnings in the previous year.
The decision to grant the old-age pension is made by the competent regional department of the Social Insurance Institution, depending on the place of residence of the person applying for the pension. The process of deciding whether to grant a pension begins once the application has been submitted.