Penny Pensions.  ZUS, OPZZ, FPP and the Ministry of the Family with pensions below the minimum

The elderly person with the lowest pension in Poland received twice a month from the Social Insurance Institution. This feature is not only related to security for the elderly, the cost of its service significantly exceeds the amount paid. According to trade unions and employers, the so-called pension problem is a real one and it must be solved. The Ministry of Family and Social Policy will present its idea in this regard soon.

– Abolition of pensions is a task of the government and Parliament – argued during the last economic forum in Karpacz the head of the Social Insurance Institution, A. Gertruda Uchinska. As I explained, benefits below the minimum (about 1250 PLN in total) are currently paid by more than 300,000 people, and there will be more in 2030 – almost 500,000.

According to the Federation of Polish Entrepreneurs, a member of the Council for Social Dialogue, since 2011 The number of retirees whose benefits are less than the minimum increased 15 times. Ten years ago, there were 24,000 of these, and now their number is 365,000. – This is 6 percent of pensioners in Poland.

Lowest pension in Poland

These benefits are less than the minimum pension, so it can be several hundred zlotys per month, but it happens that it is several zlotys or even a few zlotys. – The pensioner with the lowest benefits in Poland received exactly 2 gros per month in 2020. This was possible because this person proved to be subject to social insurance for only one day in his life – explains Sebastian Cowen, Vice President of OPZZ.

Since 1999, the pension system guarantees the payment of the benefit at the statutory minimum only after fulfilling the requirement to pay contributions for an appropriate period – 20 years for women and 25 years for men. If a person does not collect enough capital in the ZUS, then the state adds it to the minimum benefits. The pension problem concerns people who have not fulfilled the minimum contribution period requirement.

Only one paid contribution is sufficient for a monthly pension. – It is very likely that the pensioner, who received two stressful jobs, worked longer than one day, but this work was not recorded – Koćwin notes.

As noted by Łukasz Kozłowski, chief economist of the Polish Businessmen’s Confederation, the benefit of several tens of groszy or a few zlotys does not play its role in any way, and on the part of the ZUS it generates costs many times greater than the value of such a pension. – Each feature must be indexed according to the same principles and must be paid for. It seems that in such a situation it is necessary to introduce a mechanism that would reduce these unnecessary costs – he asserts.

The calculations of the Social Insurance Institution, acquired by “Dziennik Gazeta Prawna”, show that in the first half of 2021 the cost of the decision-processing unit in the pension department amounted to more than PLN 216.

Ministry prepares for pension changes

The pension problem has been discussed for several years. Now the issue is being handled by the Social Security team of the Social Dialogue Council. Sessions on this matter were held on September 23 and October 15.

During the next period, as the deputy head of the OPZZ explains, the government will introduce preliminary legislative assumptions to solve the problem of penny pensions.

“The Ministry has begun to analyze assumptions regarding changing the regulations regarding the payment of pensions below the lowest pension” – confirms the Ministry of Family and Social Policy in response to questions from TVN24 Biznes. However, the ministry did not want to reveal which direction the solutions would take.

How do you solve the problem of penny pensions?

Sebastian Cowen explains that in the opinion of the Polish Alliance of Trade Unions, the right to a monthly pension should begin with a minimum working period, say 5 years. – Bearing in mind the principle that the law may not act retroactively, in the opinion of the OPZZ, this minimum period of employment, which is entitled to a pension, should apply only to those who, after the entry into force of the regulations, would have the opportunity to work on This period – he adds.

It calculates: – the default amount of the old-age pension for people receiving salaries at the minimum wage level (currently PLN 2,800 total), with contributions over the past five years, it will be PLN 117 for women, and PLN 141 for men. These pension amounts can be the extent to which the monthly pension continues to be paid or, in the case of pensions being awarded less than these amounts, they will be paid (as a total of 12 monthly pensions) once a year.

As Koćwin emphasizes, also in the case of an annual payment, all pension rights should be preserved – deductions, free medicine, free travel, etc.

ZUS sees the same thing. The head of the office in an interview with PAP noted that in 2016 it was suggested that the right to retire should open with a working period: 5.10, 15 years or a capital increase. – We also propose to keep the acquired rights, up to this pension in the amount of 0.02 PLN, which we offer – she stated.

Transferring from ZUS once a year?

ukasz Kozłowski of the PPF sees an opportunity for agreement within the Council for Social Dialogue. Of course, there are differences of opinion among the social partners about the details of a potential solution, but as a general rule, it seems that employers, trade unions, and the government side all seem to agree that the problem is real and must be resolved, he says.

In his opinion, benefits less than a certain amount should simply be paid once a year or even in the form of a one-time payment of the total accumulated pension capital. – This will in no way change the position of those people condemned to seek support in the social assistance system in any case, and will eliminate unnecessary costs and procedures in the pension system – he adds.

At the same time – as Kozłowski notes – solving the pension problem is not the same as solving the problem of low pensions for people who have worked longer. – It is a separate issue, and also requires appropriate solutions, such as, for example, full social insurance coverage for power of attorney contracts – he explains.

Main image source: stock struggle

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