Liquidation of OFE and transfer of accumulated funds

Service

The liquidation of open pension funds is practically a foregone conclusion. On November 26, the Council of Ministers adopted a bill amending certain acts in connection with the transfer of funds from open pension funds to individual pension accounts. People who have funds in Open Pension Funds will have to decide where they want to transfer them - to a sub-account at ZUS or to an Individual Retirement Account.

Liquidation of open pension funds - where did this idea come from?

The liquidation of OFE is to be the beginning of a change in the shape of the pension system. According to the assumptions, it should be based on funds from:

  • The Social Insurance Institution (ZUS),
  • Employee Capital Plans (PPK),
  • Individual Retirement Accounts (IKE),
  • Individual Retirement Security Accounts (IKZE).

Such a system is to lead to an increase in the awareness of saving for the later years, i.e. after the termination of professional activity. It will also contribute to building a stable and safe pension system, which will result in an increase in retirement benefits.

Transfer of funds from OFE

The funds accumulated from January 1, 2010 on the OFE account may be transferred to ZUS or IKE. It is worth adding, however, that transferring money to IKE will involve paying a 15% conversion fee. This fee will not be charged when depositing funds on a sub-account at ZUS. Why? This is due to the fact that when the pension is paid out from ZUS, the benefit is reduced by the income tax in the amount of 17% or 32%. Savings taken from an individual account are not charged in this way.

The act is also intended to guarantee that the funds transferred to IKE will be privately owned by savers.

Until when to make a decision?

If the OFE member does not take any action in this matter, the accumulated assets will be automatically transferred to IKE. If you want to transfer them to the ZUS sub-account, it is necessary to submit an appropriate request to the society servicing the OFE. The interested party will have to submit such an application within the time limit specified in the act - i.e. between June 1 and August 1, 2020.

The liquidation of OFE requires the transfer of the accumulated funds to IKE or to the Social Insurance Institution. Participants who do not take any action will receive money for an Individual Retirement Account. An application for transferring funds to ZUS should be submitted from June 1 to August 1, 2020 at the latest.

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Withdrawals of accumulated funds and their inheritance

Money from an individual account can be withdrawn once or in installments, the pensioner decides which form he will choose. However, to do so, you must be at least 60 years old or have the right to early retirement and be 55 years old. In addition, so that the so-called Belka tax (19%), one of the following conditions must be met:

  • make payments to IKE in at least any 5 calendar years or
  • pay more than half of the value of the payments no later than 5 years before the date of submitting the request for payment.

However, funds that will come from OFE may be withdrawn only after reaching the retirement age and they will be exempt from taxation, as they were previously subject to the conversion fee.

Retirement pension from ZUS is paid after reaching the general retirement age - 60 for women and 65 for men. Payments from ZUS are monthly and are due for life.

Importantly, in the event of the death of the IKE owner, the heirs are entitled to the funds collected on this account. The money that will go to the sub-account at ZUS will not be inherited.

Liquidation of OFE and the minimum pension

The method of calculating the lowest pension will not change. The Minister of Funds and Regional Policy, Małgorzata Jarosińska-Jedynak, commented on this topic:

After the consultations, it was decided that it would remain as it is now, i.e. if there are insufficient funds on the ZUS account to pay the minimum retirement pension, the difference will be covered entirely from the state budget, and not - as provided in the draft before the consultation - also taking into account funds transferred from OFE to Individual Retirement Accounts.

The Act on the liquidation of OFE is to enter into force on June 1, 2020.