Poland’s prime minister has finally announced the details of the liquidation of the country’s second-pillar funds (OFEs), ending years of speculation since the government first announced plans to dismantle the system in 2016.
According to a government statement yesterday, the 15.8m OFE members will have the choice of either transferring their entire funds into newly created third-pillar individual retirement accounts (IKEs) or the first-pillar Polish Social Insurance Institution (ZUS), with different tax implications.
In the first instance, the default option, members will pay ZUS a ‘conversion’ tax of 15% of asset value, spread over two years, but subsequent payouts, either as a lump sum or in instalments, will be tax exempt.
Account holders will only be able to access their funds upon reaching retirement. Also, unlike ZUS accounts, funds accumulated in IKEs are deemed private and inheritable.