Poles treat PPK as the best investment. Record payouts. Is this within the rules?

The latest report of the Polish Development Fund regarding Employee Capital Plans indicates the growing value of the collected funds and the growing number of participants. At the end of September 2024, net assets in PPK reached PLN 29.08 billion, which means an increase of PLN 801 million. in the last month. He saves 3.6 million in it. Poles.

Attractive rate of return in PPK

The greatest activity can be seen in companies employing over 250 employees: the share in PPK reaches 78.26%. In turn, in the public sector, participation is only 27.87 percent, which suggests the need to increase the promotion of PPK among state employees. This difference is most likely due to the fact that in large companies you usually earn more, so reducing your salary by 2%. per month (this is the employee’s contribution, the employer and the state also contribute their share) is less noticeable than in companies where the work barely exceeds the minimum level.

Investors in PPK can count on attractive rates of return, which, depending on the selected fund, ranged from 129%. up to 165 percent This is more than you can earn on a deposit, so the second quarter of this year was record-breaking in terms of withdrawals. 187 thousand participants withdrew as much as PLN 498 billion from their accounts. For comparison: at the same time, in 2022, only PLN 139 million was paid, and in 2023 – PLN 400 million.

PPK is like the best investment

Although PPK should be treated as a retirement saving tool, nothing stops you from getting some of the money earlier. This is explicitly provided for in the regulations and proves that the program is flexible and does not constitute a “prison” for money. This approach was one of the ways to convince Poles disappointed with the “leap into OFE” that government pension programs are fair and not worse than private programs.

PFR, which manages the PPK program, was pleased to note that 92 percent accounts from which withdrawals were made has active status. “This means that the payers are still PPK participants and have not resigned from the program after making the refund,” we read in the announcement. This does not necessarily mean, however, that the funds left will be used in retirement: encouraged by the high rate of return, account holders may withdraw the money again in a few years and at this rate they will have a small amount left until retirement.

How to withdraw money from PPK?

Withdrawal instructions can be found on the website MojePPK.pl. “The funds accumulated in PPK are participants’ private money, which they can use at any time. It is worth knowing that withdrawing funds does not mean giving up further saving, and resignation does not involve withdrawing money,” we read.

The PPK participant can use the collected funds at any time. If a participant makes a withdrawal before the age of 60 for any purpose, the operation is called a “refund”. You can usually make a refund from the PPK account by submitting an appropriate instruction and providing the account number to which the money is to be transferred.

The fact that a PPK participant uses the refund does not mean the end of saving on the PPK account from which the refund was made. Payments to the PPK, financed by this participant and his employer, will continue to flow into this account.

Money from PPK for own contribution

The money accumulated in the PPK account can also be used to finance your own contribution to the purchase of real estate. Pursuant to Art. 98 of the Act on Employee Capital Plans, a participant of the PPK program may withdraw funds to cover the own contribution for an apartment, construction or reconstruction of a residential building once and until the age of 45. However, in the case of covering the own contribution, the repayment of these savings cannot begin later than 5 years from the date of their payment, and cannot last longer than 15 years from the date of their collection.

If you are a PPK participant, you can use your own contribution to a mortgage loan to finance:

• purchase of an apartment, house or land

• building or remodeling a house

• acquisition of ownership rights to land or part thereof

• acquiring a share in co-ownership of a residential building or residential premises constituting a separate property or a cooperative ownership right to a residential premises.

PPK – payment for own contribution: do you have to return the funds?

The RynekPierwotny.pl website reminds: “if you finance your own contribution to a loan from PPK, you will have to return the funds paid within 15 years to your individual account in the program. You can repay them in full or in installments – repayment should start no later than 5 years from the date of payment, in accordance with the terms of the contract concluded with the financing institution.

What about taxes? Here’s the good news: an own contribution financed from PPK does not expose the program participant to any additional tax costs or other deductions – provided that he returns the funds paid within the prescribed period. Otherwise, he will pay a flat-rate capital gains tax of 19% on the amount he did not pay back.