Polish pension system
The modern Polish pension system dates back to 1999, when a reform was carried out. Its essence was to reduce the burden on the state. To achieve this, it was decided to transform the social insurance institution by transferring part of the obligations to open pension funds. They were supposed to receive part of the funds from which the funded pension was formed.
As a result of the adopted changes, the pension of the country’s citizens consists of the following components:
- Contributions that are transferred to the State Social Insurance Fund (ZUS) . Every month, 12.2% of the salary of all working citizens is transferred there. From these funds the minimum pension is paid, as well as the pension of those citizens who retired before the new pension reform.
- Contributions to private pension funds. These contributions are also mandatory. Every month, 7.3% of Poles’ salaries go to open pension funds. They are led by Polish and foreign financial structures that invest the money entrusted to them in securities. Citizens have the right to choose for themselves which state-licensed organization to entrust their savings to.
- Individual savings. They are not mandatory, but any citizen can open an account or deposit in a bank to accumulate personal savings.
Pensions under the new system are awarded to citizens born in 1969 and younger. For those born before 1949, the old pension system is used. The amount of payments in this case depends mainly on the length of service. Citizens born between 1949 and 1968 can independently choose the method of calculating their pension that is most beneficial for them.
Poles are also entitled to a partial pension. It can be obtained before reaching retirement age. But in this case, only 50% of the possible full amount of payments is accrued. True, this will affect the size of your pension in the future. Payments received will be deducted from the accumulated amount of pension contributions when it is time to retire.
If a citizen dies within 3 years after his pension is calculated, his savings do not go completely to the state: part of the funds will be received by the heirs.
After them - even a flood
The decision of the Polish government is completely populist and absurd from the point of view of financial management, Nikita Maslennikov, an economist at the Institute of Contemporary Development, is convinced.
“In the short - very short - term, lowering the retirement age will, of course, give a certain boost to the economy, because it will accelerate inflation to healthy levels and reduce unemployment in the age category in which employers are reluctant to employ applicants. But in just ten years, this policy will begin to have the opposite effect: after all, the purchasing power of the population will sharply and almost instantly decrease, a huge percentage of whom will leave active economic life seven years earlier than it would have been under the old law,” he told Reedus.
Lowering the retirement age was one of the promises of the Law and Justice party, which won the elections in 2020. The Polish Sejm voted for this law in November 2020, and far from unanimously.
The reduction in the retirement age goes against the global trend that has been observed in the labor market for decades.
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Retirement age in Poland: what age do men and women retire?
According to current legislation, women can retire and receive their due pension payments upon reaching 60 years of age, and men - 65 years of age. At the same time, in order to accrue an insurance pension, a woman must work for at least 20 years paying pension contributions, and a man must work for at least 25 years.
Reducing the retirement age in Poland in 2020
When the pension reform was carried out in 1999-2000, it was assumed that the retirement age would gradually increase and by 2040 it would reach 67 years for all citizens, regardless of gender. This decision caused a wave of popular discontent. The new government coalition, after a lot of debate and disagreement on this issue, nevertheless decided to refuse to raise the retirement age and, even moreover, to lower it to 60 years for women and to 65 years for men. The resolution came into force on October 1, 2020.
What is the level of pensions for teaching staff?
The pension of teachers in Poland is approximately 50% of their salary. The average salary of a Polish teacher is 800 euros. The pension reform carried out in the country deprived teachers of the right to early retirement if they had at least 30 years of work experience.
The retirement age for them is set at 60 years for women and 65 for men. The only advantage they have is the ability to increase the initial capital in an individual pension account if they continue to work after already having 30 years of work experience.
Pension size in Poland
In general, the average pension in Poland is lower than in advanced EU countries such as France and Germany, but higher than in the countries of the former CIS and Russia.
The size of the pension in the country is approximately 40% of wages, but some categories and professions have higher interest rates. The highest pensions are received by military personnel, primarily military prosecutors. The amount of payments to them reaches 75% of wages. But in order to count on increased pensions, officers and soldiers must serve in the army for at least 15 years. Teachers are also entitled to an increased pension. After finishing their working career, they receive approximately 50% of their salary.
Minimum pension in Poland
On March 1, 2020, the next indexation of pensions took place. After this, the minimum pension in the country reached 1200 zlotys.
In practice, not many citizens receive this amount, only 4-5%. These are mainly foreigners who, for various reasons, have not accumulated enough insurance experience to calculate pensions according to local laws.
Average pension in Poland
Most pensioners receive a much larger monthly amount. Those who have the required length of service and have regularly made contributions to the pension fund receive an average of PLN 4,294.67. This is the size of the average pension of Poles according to data at the beginning of 2020.
How is a pension calculated in Poland?
As in other countries, the level of pensions in Poland depends on various factors, including the length of service of pensioners, their earnings, and the sector of employment. So, in order to receive the minimum payments here, the applicant must prove that he has a work experience of at least 15 years (this is for women) - 20 (for men), which includes only legal work.
If he succeeds, the state may assign a minimum pension, the amount of which will be 800 zlotys. In the same case, if a person cannot confirm this fact, he will be awarded a smaller pension depending on his official length of service.
For pensioners who have worked for more than 20 years, payments are calculated according to the standard scheme. In this case, the pension will be only 40% of the salary that the Pole previously received.
If a person has a long social history and even has special services to society, he can count on a fairly high level of pension. It can be up to $800. However, no more than 5% of the population of this country can count on this level of income.
Pension in Poland for Russians, Belarusians and Ukrainians
Foreign citizens who moved to Poland for a long period of time, living and working there legally, can also count on receiving a pension. However, problems may arise here.
The situation is simpler for citizens of Ukraine, which in 2014 concluded a bilateral agreement on social security with Poland. According to the signed agreement between the countries, years of work in the homeland will be included in the total length of service, and the citizen can count on receiving an insurance pension on the same basis as native Poles.
As for citizens of Russia and Belarus, these countries do not have such an agreement with Poland. The question of whether years of work in the home country will be included in the total length of service, and therefore whether a pension will be assigned, is decided individually when applying to the Pension Fund.
How do pensioners live in Poland?
Despite the fact that pensions in Poland are on average lower than in other EU countries, pensioners live well here. The funds they receive monthly are enough to cover food, pay for utilities, attend cultural events, courses, trainings, and even travel. In addition, the state helps citizens by providing them with various benefits.
A good standard of living for retirees is possible thanks to low food prices. In Poland, weekend fairs are widespread, where farmers sell their good quality products at low prices. In addition, large stores also organize days for pensioners, when they can purchase goods at good discounts.
If desired, retirees can continue to work. There are currently no restrictions in this regard. Part-time work will not be grounds for canceling your pension.
Poland
Retirement in Poland occurs for men at 65 years old, for women at 62 years old, the average amount of state old-age payments is 382 euros. This is a low figure compared to neighboring European countries, but Polish pensioners manage to live quite well on this amount, because food prices in this country are quite low.
The government also pays pensioners for housing costs, gives them the opportunity to attend cultural events, various courses for free or at a big discount, and provides benefits for purchasing tickets when traveling in the Schengen area. Many older people have no trouble finding legal, well-paid jobs. Since wages are very high in Poland, this is a good additional income for retirees.
Benefits for Polish pensioners
The state provides support to pensioners, trying to provide them with a decent standard of living. Moreover, the lower the pension, the more social privileges a citizen receives. Polish pensioners with low incomes can count on a number of benefits from the state:
- Benefits for utility bills. If a pensioner’s income is low and does not reach the average level, the state will help him pay for utilities. Depending on the size of pension payments, from 50 to 100% of housing maintenance costs can be compensated.
- Preferential travel around the country. Elderly people are provided with discounts on public transport. And for people over 70 years of age, travel around the city in many localities is completely free.
- International travel benefits. Twice a year, Polish pensioners can buy a discounted ticket for rail travel. Airlines also provide good discounts on tickets for senior citizens.
- Benefits for medicines. Low-income pensioners are provided with benefits for the purchase of medicines, and elderly people over 75 years of age are provided with them free of charge. Pensioners also receive access to private medical institutions. This is being done in order to relieve public clinics and eliminate queues to see doctors.
- Benefits when visiting cultural institutions, educational clubs, and trainings. The state and charitable organizations organize leisure activities for older people. For them, attending various cultural and educational events is free or the ticket price will be minimal.
Thus, thanks to state assistance, Polish pensioners, even receiving a minimum pension, do not live in poverty and live in dignity.
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France
The average pension in France is 1000 euros, the age limit for retirement is 62 years, but due to the pension reform it will gradually increase and by 2023 it will reach 67 years. The amount of pension payments is affected by length of service. To receive the full pension, it must be 42 years old; with less length of service, payments are reduced by 1.25% for every missing 3 months.
If a pensioner receives state old-age benefits below the subsistence level, the French government pays him a “solidarity” benefit in the amount of 800 euros.
