PPK with Nationale-Nederlanden - AIG Global Benefits Network · 2020-07-02 · 3 PPK will be...

0

PPK with Nationale-Nederlanden

1

Origin: PPK are supposed to increase private savings in Poland and capital availability for Polish companies The savings rate in Poland, significantly lower than in other

European countries, hinders capital accumulation

Savings as % of disposable income

16.2% 15.5%

14.6% 13.3% 12.8%

10.5%

7.9%

5.5%

2.4%

Source: Euromonitor, Responsible Development Plan

III Pillar

I Pillar

II Pillar

2

From 2019, PPK will be a key element of the Polish pension system, complementing the current solutions

0 ZUS since 1934

1 OFE since 2013

OFE since 1998

2 PPE since 1998

3 IKE since 2004

4 IKZE since 2012

5 PPK since 2019

2004 2019 2013 1934 2012 1998

3

PPK will be launched in stages. Companies employing at least 250 people will have to start PPK first

Your Pension Expert

Companies will be obliged to establish PPK within the

deadline dependent on their size

• A financial institution may be chosen in advance for a whole

capital group, irrespective of stages applicable to particular

companies

• Management agreements for particular companies may enter

into force at a later date, in order to spare you unnecessary

costs

Other companies and the public

sector

250 employees and more

From 50 to 249 employees

From 20 to 49 employees

01.07.2019 01.01.2020 01.07.2020 01.01.2021

4

The main assumption of PPK: a form of savings to support pensions

PPK will cover 11 mln Poles

Mandatory for the employer,

voluntary for the employee

Funds invested on a long-term basis

in securities

By law, funds are private

(fully owned by a

participant)

Full withdrawal over the age of

60

Early withdrawal possible

(no deductions in defined situations)

5

Between 3.5% and 8% percent of the wages will be saved with PPK, with an additional contribution from the State Employee Employer State

Basic contributions 2% 1.5%

Welcome contribution: PLN 250 Annual extra contribution: PLN 240 2% 2.5%

Additional contributions

to to

• An employee's contribution is

deducted from their net wages

• (after income tax and

social insurance premiums),

calculated

from gross wages

•Employer’s contribution

is exempt from old age

and disability pension

premiums, and is

calculated

from gross wages

• The State's fixed extra contribution,

regardless of the amount of

contributions. Those who earn the

least receive comparatively more

2% 1.5% Welcome contribution: PLN 250 Annually: PLN 240 / year

2% 2.5% to to

• Employees’ contributions

deducted from their net salaries

(after income tax), calculated

from

their gross salaries

•Employer’s contribution is

exempt from old age and

disability pension

premiums, and is calculated

from gross wages

• The State's fixed extra

contribution, regardless of the

amount of contributions. Those

who earn the least receive

comparatively more

6

An employee earning lower wages will be able to reduce their basic contribution amount

Employee Employer State

Basic contributions

People receiving wages with the multiplication factor no higher than 1.2 (altogether, from all sources) will pay a minimum contribution of 0.5% (i.e. they can reduce the basic contribution to the 0.5%-2% range). Additional

contributions

Wages from all sources multiplied by 1.2

State

• Employee's contribution

deducted from their net wages

(after income tax), calculated

from gross wages

•Employer's contribution

exempt from the old age

and disability pension

premiums, calculated

from gross wages





comparatively more

7

The law precisely stipulates the dates on which the contributions will have to be recorded on PPK accounts Employee Employer

Basic contributions

2% 1.5% Welcome contribution: PLN 250 Annually: PLN 240 / year

2% 2.5%

The contributions are made by the 15th day of the month that follows their calculation and collection Additional

contributions to to

to

Employer

2%* 1.5% Welcome contribution: PLN 250 Annually: PLN 240 2% 2.5%

Additional contributions

Basic contributions

8

The law precisely stipulates the dates on which the contributions will have to be recorded on PPK accounts

• The welcome contribution is made 30 days after the end of a quarter

• The annual extra contribution is recorded by the 15th of April of every year





comparatively more

State

As an employer, you have a number of obligations in connection with PPK

Your Pension Expert Support

Budget the additional cost in your financial plans

Conclude PPK management and administration agreements on behalf of employees

Implement the PPK systemically and ensure good communications to employees Adjust HR Payroll systems

At each stage of the Employee Capital

Plan implementation, Nationale-

Nederlanden will support the Employer

as regards the processes and the system

10

Budgeting the additional cost in your financial plans

The employer’s additional contributions may be treated as a type of benefit for employees

Participation in PPK (% of employees) Amount of

contributions A sample simulation of the

employer’s annual cost… Basic contribution:

Additional contribution • ...from an employer with 1,000 employees

• ...paying an average salary of PLN 4,500 • … with mandatory and additional contributions

Basic contribution:

Additional contribution

Basic contribution:


Basic contribution:


Your Pension Expert

• The amount of an additional contribution may be differentiated in your remuneration regulations

• Within your budget, we can suggest an optimal system of differentiating additional contributions

• Additional PPK contributions may serve as a component making an employer’s offer more attractive in today's

short-supply labour market

50% 75% 90% 100%

1,5% + 0%

400 607 729 810

1,5% + 0,5%

540 810 972 1080

1,5% + 1,5%

810 1210 1450 1620

1,5% + 2,5%

1 080 1 620 1 940 2 160

Cost in PLN thousands

11

It is not worth hurrying up to implement PPE as PPK will be cheaper for you and more beneficial for your employees (part

1)

PPK offers a lower management fee The employer’s contribution is lower in PPK

PPK enables earlier withdrawals of money PPK enables easier consultation with trade unions

PPK is easier in procedural terms In PPK, the employee receives an extra contribution from the State

PPK PPE Your Pension Expert

PLN 1,417,500 PLN +810,000

Simulation of an annual cost for an employer who... • ...from an employer with 1,000 employees • ...with a participation level of 75% • ...paying an average salary of PLN 4,500

PLN 607,500

* Assuming all employees will be enrolled in PPE

12

It is not worth hurrying up to implement PPE as PPK will be cheaper for you and more beneficial for your employees (part 2)

PPK PPE exempting from PPK

PPK requires lower employers’ contributions

1.5% 3.5%

PPK means less trade unions’ involvement Consultation required (Intercompany) works agreement required

In PPK, the employee receives an extra contribution from the State

PLN 250 welcome contribution PLN 240 annual contribution

PLN 0 of the State’s contributions

PPK offers a lower management fee 0.5% (+0.1% conditionally for success) 0.6%

PPK enables earlier withdrawals of money Early withdrawal with no deductions in specific situations

Early withdrawal not possible – only from IKE after leaving a given company

PPK is easier in procedural terms Simplified procedures and documentation, quick programme creation

Must be proceeded by the KNF in order to be entered into the PPE register

13


The key dates in the PPK implementation process. The preparation period is of key importance due to the limited implementation time.

IMPLEMENTATION PERIOD PREPARATION PERIOD

31.12.2018 Employee count date

25.10.2019 Final date for concluding the PPK management agreement

1.07.2019 Formal choice of PPK • Setting up employee representation • Selection of a financial institution

03.2019 Possibility of PPK formal choice opened up

Article 134 of the PPK law

Article 8 of the PPK law Article 8 of the PPK law

Dates of placing financial institutions on the PPK register Formal consultations

with employees

30 days for the choice through employer

December 2018

September October November May June July August January February March April

12.11.2019 The deadline for concluding a PPK administration agreement

25.09.2019

The deadline for holding consultations with employees

Time to prepare for: • adjustment of HR Payroll systems, • implementation of procedures (e.g. monitoring employment

period for PPK qualification), • generating registration files, • calculating contributions, registering access/resignation

declarations.

1.01.2019 The state of PPK registration with PFR




Early withdrawal possible

(no deductions in defined situations)

Full withdrawal over the age of

60

Funds invested on a long-term basis

in securities

By law, funds are private

(fully owned by a

participant)

Mandatory for the employer,

voluntary for the employee

14


The employer concludes a PPK administration agreement on behalf of its employees – the law defines the participation criteria

PPK will cover 11 mln Poles

!!! The employee's employment period in a given company must be at least 3 months For people already employed, the period will be calculated from the date of the PPK law entering into force with reference to a given entity.

Employee enrolment to PPK depending on age

Employee age Enrolment to PPK (administration agreement)

From 18 to 54 years of age Default

Between 55 and 69 years of age On demand of employee

70 years of age Impossible to join PPK

15

Implement the PPK systemically and ensure good communications to employees

We offer you tools that facilitate the launch of PPK, its day-to-day administration and its communications to employees.

Communication and education tools for the

employee

PPK website for the Employer and Employee

Handling manual for the Employer's administrators

We will provide our clients with materials and tools for PPK communications: • savings calculator • organisation of an information meeting

with our representative • introductory e-mail to the employees • Q&A list for Employees with an explanation

about funds of given dates • one pager with the NN’s distinctive features –

for example for the Employee Board, unions and other groups within the company’s organisation.

• presentation/e-learning with information about PPK

• animation/video on TV/YouTube • materials about PPK for the intranet and

company bulletin

It will explain in depth the following processes: • concluding PPK agreements • necessary changes to the HR Payroll system • registering employees in PPK • transferring PPK contributions • handling declarations/statements • generating reports • managing website access authorisation

The employer’s website is a tool that will facilitate concluding PPK agreements (both contracts will be signed electronically) and day-to-day administration, including: • registration of new employees and regular

registrations every 4 years (in line with the law) • amending the participants’ personal and

contact data • viewing the participant list • generating contributions reports • placing contribution level orders • resignations from PPK

16

Adjustment of HR Payroll systems

We support all the administration processes through our PPK Website, regardless of the HR Payroll system used

Employer Employer / Financial institution Employer / Employee Employee / Financial institution

• Getting access to the employer’s portal

• PPK management agreement

conclusion/amendment (the employer’s website)

• Conclusion of a PPK administration agreement

• Forwarding contribution files and the money transfer

to a financial institution (can be generated directly

from the system or through the employer’s website)

• Forwarding information on contribution

resignations/resumptions

• Forwarding new employees’ instructions regarding

transfer from their hitherto PPKs

• Change of employees’ contact details

• Information about the possibility to conclude

a PPK administration agreement for people over 55

• Information for employees about the possibility to

declare additional contributions

• Declaration of accession to PPK (55+)

• Declaration on suspension/resumption of

contribution payments

• Choosing/changing basic contributions by persons

with earnings below the threshold indicated

in the law

• Indication/change of the additional contribution

• Accepting declaration on PPKs held from new

employees

• Transfer objection statement from a new

employee

• Getting access to the website by

employees (to view operations and

give direct orders)

• Declaration on changes in the

distribution of the contribution/assets

among funds can be done only

individually by the employee after the

conclusion of the PPK administration

agreement)

• Confirmation of the conclusion of a

PPK administration agreement

• Annual statements

• Naming/changing beneficiaries

• Amending data

• Withdrawals/refunds

• Entering information into

the HR Payroll system:

• Marking contributors

• Registering resignations

and resumptions

• Level of basic and

additional contributions

for every employee

• Calculating contributions

from people covered by

PPK

• Re-registration with PPK

every 4 years

Your Pension Expert

• We have a complete catalogue of processes introduced by PPK, in all points of contact

• As part of PPK implementation at your company, we will provide you with the best process-related practices and will help you to implement

processes along the line an employer – a financial institution

17

What PPK means for an employee

18

By saving for their pensions with PPK, employees gain additional funds from the Employer and the State

Contribution Employee Employer State

Minimum (obligatory) 2%* 1.5% Welcome contribution: PLN 250 Annually: PLN 240 / year

Employer’s monthly contribution (PLN) Gross salary (PLN)

Employee's monthly contribution (PLN)

State’s monthly contribution (PLN)

Total contributions on top of the employee’s contributions (% of employee's contribution)

2,250 (minimum) 11.25 33.75 20 53.75 (+477%) 0.5% of salary*

3000 60 45 20 65 (+108%)

4,700 (average) 94 71 20 91 (+96%)

5,000 100 75 20 95 (+92%)

Your Pension Expert

• Saving up in PPK will allow employees to earn more than the best term deposit with any bank

• Thanks to the extra contributions from the State and the Employer, the contributions of an average earner will be nearly

doubled

* People receiving wages no higher than 1.2 times the monthly minimum wage may reduce their contribution to 0.5%.

19

The employee will have the opportunity to withdraw the money at any time – withdrawals after the age of 60

Withdrawal when participant reaches the age of 60

Marital payouts 1 2

By default, funds are paid out as the first one-off payment (25% of the funds) and 120 monthly instalments (75% of the funds)

PPK PPK PPK

Payouts to a shared account in at least 120 instalments

Conditions for marital payouts:

PPK participant is 60 or over

their spouse is 60 or over

spouses must have their PPKs in the same institution

If the amount of the first instalment (after dividing the funds into 120 instalments) is less than PLN 50, a one-off payment is made

one time remaining

of funds within at least 120 monthly installments

20

Employee will have the opportunity to withdraw the funds at any moment – payout possibility before 60 years of age

4 5 3 One-off (with the refund

obligation)

Refundation before 60 years of age

Due to serious illness (no refund)

100% Contributions

Employee

to a bank or credit union (SKOK) account defined by the participant 25%

one-off payout

up to100% of the value of repurchased funds – 19% tax)

Funds on the account With the refund obligation

30% to a bank account indicated by ZUS Payout purposes:

• house construction or redevelopment

• Other cases (e.g. purchase of property/home)

Payout possible due to a serious illness of:

PPK participant

PPK participant’s spouse

PPK participant’s child

Contributions

Employer

The value of repurchased funds

70% to a bank or credit union (SKOK) account defined by the participant

of the value of repurchased funds – 19% tax)

When reaching 45 years of age, the PPK participant loses the right to apply for a one-off payment due to the said reasons

Capital gains tax is not applied to the

payout. 0% Contributions

State State contributions are not paid out to the Employee

21

Why is Nationale-Nederlanden a good choice?

22

The NN Group is an independent international company with vast experience in managing its Clients' savings

Simple process, integration and assistance

• We will ensure a simple process for your company, for instance supporting a

full integration with your HR Payroll system

• You may count on our broad support, including an individual Customer

Assistant, information campaigns for employees

2017 Data

Assets EUR 246 billion

Equity EUR 227 billion

#1 in the Polish pension market

Number of markets >18 • PLN 40 billion worth of OFE assets at the end of June 2018 – the most in the

market

• The highest long-term rate of return in OFE (from May '99 to July '18) – 336,7% Number of Clients’ policies 17 million

Employment 15,000

Operating profit 2017 Professional investment team

• Nationale-Nederlanden boasts more than 90 years of experience in the capital

market

• In Poland, we are distinguished by having 3 persons dedicated to investment

risk management

NN Group EUR 1.58 billion

The Nationale-Nederlanden Group is an entirely independent entity, listed on the Euronext Amsterdam stock exchange. Since 2016, we have been independent from ING Group.

23

Nationale-Nederlanden PTE is a leader in the pension market in Poland

The highest long-term

rate of return

The largest

pension assets

The best Voluntary Pension Fund

(DFE) in the market

Assets as at June 2018 (PLN bln) Total rate of return from OFEs’ establishment to June 2018

Ranking of IKZEs with a voluntary pension fund, in pts, as prepared by the Rzeczpospolita daily (March 2018)

2

3

7

7

8

10

13

14

20

35

40

15,2

31,3

34,6

40,4

42,6

69,9

90,1NN OFE NN Aviva OFE

PZU PZU Złota Jesień OFE

336.7% Aegon OFE PKO

MetLife OFE

Allianz AXA OFE

Generali OFE MetLife

Allianz Polska OFE

PKO BP Bankowy OFE Pekao Nationale-Nederlanden PTE S.A. manages an Open Pension Fund (OFE) with the highest rate of return from OFEs’ establishment, that is from 20.05.1999, to 18.05.2018.

Pocztylion OFE Pocztylion Pekao OFE

Source: own calculation

24

As NN PTE, we are going to stick to the strategic descent path and appropriate rules of rebalancing FZD portfolios

Target-Date Funds (FZD)

Funds gathered in PPK are invested in the so-called Target-Date Funds. Target-Date Funds (FZD) belong to the category of life cycle funds.

Nationale-Nederlanden DFE Nasze Jutro 2025 LOW RISK FUND A fund for people born in 1959-1967

Nationale-Nederlanden DFE Nasze Jutro 2030 LIFE CYCLE FUND A fund for people born in 1968-1972







The FZD's goal

The FDZ's goal is to gather additional funds as safeguard for old age. The target date is set for the period in which participants in a given FZD will enter retirement age. Under the PPK law, the age is about 60.

FDZ is:

Long-term mixed fund

The allocation of asset classes (shares/bonds) changes with the passage of time

The risk is adapted to the age of fund participants

The Low-Risk Fund is designed for people with

high risk aversion or for people saving up for

short-term goals

25

As NN PTE, we are going to stick to the strategic descent path and appropriate rules of rebalancing FZD portfolios

Target-Date Funds (FZD)

Strategic allocation, or the share of the equity part and the share of the debt part, is the most important factor that determines return on the portfolio in the long term and the volatility of its value (or risk) over the investment period.

Funds gathered in PPK are invested in the so-called Target-Date Funds. Target-Date Funds (FZD) belong to the category of life cycle funds.

The FZD's goal

The FDZ's goal is to gather additional funds as safeguard for old age. The target date is set for the period in which participants in a given FZD will enter retirement age. Under the PPK law, the age is about 60.

FDZ is: The key goal is to increase the value of the fund's assets Higher expected rates of return Higher risk

Long-term mixed fund

The allocation of asset classes (shares/bonds) changes with the passage of time

The risk is adapted to the age of fund participants

Strategic descent path

Strategic share of the debt part Strategic share of the equity part

Upper limit for share of the equity part according to PPK Lower limit for share of the equity part according to PPK

The safety of PPK investments

The PPK law imposes a high level of security and liquidity for target-date fund deposits:

At least 70% of net assets in the debt part of the portfolio should be made up of the safest Treasury bonds (e.g. securities issued by the State Treasury, the National Bank of Poland or possibly the government or central bank of an EU member state) as well as bank deposits.

At least 40% of net assets in the equity part of the portfolio should be made up of shares listed in the WIG20 index, or more precisely equity instruments issued by companies included in the WIG20 index.

At least 20% of net assets in the equity part of the portfolio should be made up of foreign shares listed in OECD countries.

The shares included in the mWIG40 index may not constitute more than 20% of net assets in the equity part.

The remaining Polish shares may not constitute more than 10% of net assets in the equity part.

27

Myths about PPK Fact Myth

• The act on PPK guarantees that participants’ funds are private and subject to

an unconditional succession • Participants’ funds are not safe in PPK

• PPK is cheaper for an employer than PPE which exempts them from the

obligation to establish PPK • PPK is more expensive for an employer than PPE

• Institutions are free to choose how they will support a company in PPK

implementation (e.g. helpdesk, materials to communicate with employees) • Institutions will ensure the same level of assistance in PPK

implementation and servicing

• PPK accession and administration processes will be automated and simplified

to varying degrees • Each institution will offer a company the same processes

• Funds accumulated in PPK cannot be used

until one’s retirement

• Funds accumulated in PPK can be withdrawn with no deductions in specific

situations or at any time (after the tax has been deducted)

Your Pension Expert

• Before choosing a PPK provider, it is worth getting acquainted with solutions offered by pension market leaders

28

What issues or questions regarding PPK at your company do you consider crucial?

Please send your questions also to the address [email protected]

29

Date post:	16-Jul-2020
Category:	Documents
Upload:	others
View:	2 times
Download:	0 times

PPK with Nationale-Nederlanden - AIG Global Benefits Network · 2020-07-02 · 3 PPK will be...

Documents