Annual Indexation of Pension Contributions in ZUS: Everything You Need to Know

June 1 every year is the most important date for future retirees. On this day, ZUS indexes the contributions accumulated on the pension account, the initial capital and the contributions on the subaccount. As a result, pensions calculated in July are much higher than in the second quarter of the year. According to preliminary calculations, the indexation of contributions and initial capital for 2023 will be record-breaking and will amount to 14.8 or 14.9 percent.

The indexation of capital accumulated in the subaccount will be slightly lower, but on average it has a share in the capital on the basis of which ZUS calculates the pension amount at 20 percent – the rest is contributions and initial capital.

Everything you need to know about the annual indexation of pension contributions in ZUS

In almost a month, we will know the indexation rates of future pension contributions accumulated in ZUS at the end of 2023.

Pursuant to the provisions of section 6 of the Act of 13 October 1998 on the social insurance system, the amount of the contribution indexation index depends on inflation and the increase in pension contributions in the previous year. Valorization cannot be negative.

Since inflation was high in 2023 – 11.4%, and the increase in written contributions was even higher than before, according to ZUS’s preliminary estimates, the annual indexation rate of contributions and initial capital will be 14.8 or 14.9%.

A year earlier, this indicator was also high – 14.4%, which was mainly due to high inflation.
In turn, for 2021 in June 2022, the indexation of pension contributions was 9.33%.

This means that over three years the sum of contributions accumulated in the pension account, including the initial capital was increased by 38.5 percent, and taking into account the annual capitalization for 2021-2022, it certainly exceeded 40 percent.

Of course, this is a nominal increase, the real value of capital did not increase that much due to inflation, although the three subsequent indexations certainly protected pension capital from loss of value and perhaps even slightly increased its real value.

Sub-account in ZUS: how it is indexed once a year

However, the increases in funds accumulated on subaccounts are slightly smaller. Here, the rules for annual indexation, also performed on June 1, are slightly different.
Pursuant to the provisions of the above-mentioned Act on the social insurance system, the annual indexation rate of contributions recorded on the sub-account kept by the Social Insurance Institution as part of the insured person’s account is equal to the average annual dynamics of the value of gross domestic product at current prices for the last five years preceding the indexation date.

We saw a record indexation of subaccounts last year – then the indexation rate was 9.2 percent.
For 2021, the indexation carried out on June 1, 2022, regarding pension funds on subaccounts, was 7.07%.

This year’s indexation indicator will be heavily influenced by the small GDP growth in 2023, currently estimated by the Central Statistical Office at only 0.2%. A year earlier, in 202, GDP grew by 5.3%.
As a result, the indexation rate of funds accumulated in pension subaccounts at the end of 2023 will probably be in the range of 7.9-8.2%.

It is better to wait up to three months to apply for a pension [wyliczenie]

If a senior reaches retirement age in April 2024 or in the next two months, he or she will lose a lot of the pension amount by applying for a pension immediately.

For example, let’s compare the pension of a man who will reach retirement age in April – without taking into account the part due from the retirement subaccount.

Let’s assume that he has PLN 900,000 in his retirement account, taking into account the initial capital. zloty.

If he applies for a pension in April, ZUS will calculate a pension of PLN 4,111.47 (900,000 divided by 218.9 from the life expectancy table).

If he submits the application in July, the account and initial capital will be increased by 14.9%. and will amount to PLN 1,034,100.

ZUS will calculate the pension in the amount of PLN 4,769.83 – assuming that no contributions will be transferred to the account for the following months, and from the ZUS tables it will take data for the age of 65 years and 3 months, i.e. PLN 1,034,100 and divide this time by 216.8.

Let us emphasize once again that, for simplicity, we do not take into account funds from the subaccount, which will increase the final pension amount by an appropriate amount.