People who entered the labor market after 1999 can count on a retirement pension of only 30%. your current earnings. This is much below their expectations. Poles claim that for a comfortable life they would need a pension of 60 to 80 percent. salary. Meanwhile, many people will not even be entitled to a minimum pension.
The pensions of future seniors will be much lower than expected
As we read on the Interia business portal, Poles’ perceptions and requirements regarding their future pensions are extremely different from their projected amount. According to a study by Aegon, 36 percent. Poles estimate that they will be provided with comfortable living conditions by retirement at the level of 60-79 percent. current earnings. In turn, 33 percent. of respondents would like a pension of 80 to even 100 percent. current earnings. However, the forecasts are much less attractive. They show that people who entered the labor market after 1999 will receive pensions in the amount of only 30 percent. current salary. Self-employed persons will be entitled to even smaller pensions. Individual calculations regarding the projected retirement pension are presented annually by ZUS and everyone has the opportunity to check what benefits they can expect, therefore the excessive expectations of Poles are all the more surprising.
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For some, even a minimum pension is unavailable
According to Interia, such low pension rates result from a decrease in the replacement rate, i.e. the ratio of old-age pension to earnings. This may be related to the low fertility rate of Poles and the aging of Polish society. In the case of people who retire, the replacement rate is currently 50%, but for young and middle-aged people who started work after 1999 and who are not entitled to the initial capital, it will be – as already mentioned – only 30%, provided that these people they were employed under a contract of employment and paid pension contributions on their total earnings. Employees with lower pension contributions can expect an even lower pension.
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– The worst will be the situation of people who pay low contributions and those who do not meet the conditions for receiving the lowest pension, i.e., for example, will not work out the period of insurance, which is 20 years for women and 25 years for men. Especially that people with pensions below the minimum do not get some “bonuses” for low benefits, such as valorization of the amount – we read the words of Łukasz Kozłowski, an economist of the Federation of Polish Entrepreneurs on the Interia portal. The number of people without the right to the lowest pension (amounting to PLN 1,200 gross) has increased 14 times in the last nine years. Currently, people to whom ZUS pays a benefit lower than the minimum pension, constitute 5.6 percent. all retirees. In 2020, the benefit below the minimum pension will receive 333 thousand. people. The low work experience of some pensioners results not only from employment downtime, but also from long-term employment on non-contributory “junk contracts”.
Some people running a business will receive lower pensions also due to the current exemptions in contributions to ZUS. It is true that they improve their situation in the times of the crisis caused by the pandemic, but in the long run – they will translate into a lower amount of savings accumulated on the ZUS account, constituting the basis for the payment of old-age or sickness benefits. For this reason, trade unions are opposed to such allowances. The retirement age also influences the amount of the old-age pension, which is lower for women than for men. Each additional year of work increases the amount of the pension by 10 to 15 percent. For this reason, women born in the 1980s will receive pensions of only 20%. the last wage they collected.
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Unfortunately, many Poles do not realize how low pensions they will receive. The latest calculations regarding the amount of the old-age pension (in gross rates) on the basis of paid contributions are sent by ZUS every year by post. This year, the simulation of the future retirement could also be checked on the ZUS Electronic Services Platform. The development of social awareness of the pension system is also not conducive to additional pensions, the so-called “thirteen” and “fourteen”, which obscure the relationship between the length of service and the amount of the benefit. On the other hand, a positive change in the pension system is the creation of Employee Capital Plans (PPK), which may, to some extent, contribute to the neutralization of the effects of the decline in the replacement rate.
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