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Penny pensions. ZUS, OPZZ, FPP and the Ministry of Family with pensions lower than the minimum

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The senior with the lowest retirement pension in Poland received 2 groszy a month from the Social Insurance Institution. Such a benefit not only has little to do with security for old age, but also the cost of its servicing significantly exceeds the amount paid. According to both trade unions and employers, the problem of the so-called penny pensions is real and should be solved. The Ministry of Family and Social Policy is also to present its idea in this matter soon.

– The elimination of penny pensions is a task for the government and parliament – argued during the recent Economic Forum in Karpacz the president of the Social Insurance Institution, prof. Gertruda Uścińska. As she explained, benefits lower than the minimum (about PLN 1,250 gross) are currently being paid by over 300,000 people, and there will be more, in 2030 – almost 500,000.

According to the Federation of Polish Entrepreneurs, a member of the Social Dialogue Council, since 2011 number of pensioners with less than the minimum benefit increased 15 times. Ten years ago, there were 24,000 such people, now it’s 365,000. – that is 6 percent retirees in Poland.

The lowest pension in Poland

It is about benefits below the minimum pension, so it can be several hundred zlotys a month, but it happens that they are several zlotys or even a few groszes. – Exactly 2 grosze every month in 2020 was received by a pensioner with the lowest benefit in Poland. It was possible because this person proved that he was subject to social insurance for only one day in his life – explains Sebastian Koćwin, vice-president of OPZZ.

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Since 1999, the pension system guarantees the payment of the benefit in the minimum statutory amount only after meeting the condition of paying contributions for an appropriate period – 20 years for women and 25 years for men. If someone has not collected adequate capital in ZUS, the state then adds him to the minimum benefit. The problem of penny pensions concerns people who have not met the requirement of the minimum contribution period.

And just one paid contribution is enough to get the right to a monthly retirement pension. – It is very possible that the pensioner, who received 2 groszy, worked for a much longer period than one day, but this work was not registered – notes Koćwin.

As noted by Łukasz Kozłowski, chief economist of the Federation of Polish Entrepreneurs, a benefit of several dozen groszy or a few zlotys does not fulfill its role in any way, and on the part of ZUS it generates costs that many times exceed the value of such a pension. – Each benefit must be indexed on the same principles and its payment must be ordered. It seems that in such a case it is necessary to introduce a mechanism that will reduce these unnecessary costs – he emphasizes.

The calculations of the Social Insurance Institution, which were obtained by “Dziennik Gazeta Prawna”, show that in the first half of 2021 the unit cost of handling decisions in the pensions division amounted to over PLN 216.

The ministry is preparing for changes in the pensions pensions

The problem of penny pensions has been discussed for several years. Now the matter is being dealt with 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 one, the deputy head of the OPZZ explains, the government is to present preliminary legislative assumptions to solve the problem of pensions of pennies.

“The ministry has begun to analyze the assumptions regarding the change of regulations regarding the payment of pensions lower than the lowest retirement pension” – confirms the Ministry of Family and Social Policy in response to TVN24 Biznes’s questions. However, the ministry did not want to reveal in which direction the solutions would go.

How to solve the problem of penny pensions?

Sebastian Koćwin explains that, in the opinion of the Polish Alliance of Trade Unions, the right to a monthly pension should start with a minimum period of employment, for example 5 years. – Taking into account the principle that the law cannot act retroactively, in the opinion of the OPZZ, this minimum period of employment, entitling to a retirement pension, should apply only to those who, after the regulations come into force, would have a chance to work out this period – he adds.

And calculates: – The hypothetical amount of the old-age pension for people earning at the level of the minimum wage (currently PLN 2,800 gross – ed.), With contributions over the last 5 years, would be PLN 117 for women, and PLN 141 for men. These pension amounts could be the limit from which the monthly pension continues to be paid or, in the case of below these pension amounts awarded, they would be paid (as a sum of 12 monthly pensions) once a year.

As Koćwin emphasizes, also in the case of the annual payment, all retirement rights should be maintained – discounts, free medicines, free, travel, etc. – In our opinion, the rights related to the aggregation of insurance periods in various European Union countries should not be lost – he notes.

ZUS sees the same thing. The head of the office indicated in an interview with PAP that in 2016 it was proposed that the right to retirement should be opened with a period of employment: 5.10 or 15 years or raised capital. – We also propose to keep the acquired rights, even up to this pension in the amount of PLN 0.02, which we are servicing – she stated.

Transfer from ZUS once a year?

Łukasz Kozłowski from the PPF sees a chance for an agreement within the Social Dialogue Council. – Of course, there are differences of opinion between social partners on the details of a possible solution, but as a rule, it seems that both employers, trade unions and the government side agree that the problem is real and should be resolved, he says.

In his opinion, benefits below a certain amount should simply be paid once a year or even in the form of a one-off payment of the entire accumulated pension capital. – This would not in any way change the situation of those people who are condemned to seek support in the social assistance system anyway, and would eliminate unnecessary costs and procedures in the pension system – he adds.

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

Main photo source: Shutterstock

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