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ESSENTIAL HR UPDATE New Developments in Employee Benefits and Labor Law

ESSENTIAL HR UPDATE New Developments in Employee Benefits and Labor Law. Wednesday, November 24th, 2004 Warsaw, Poland. PPE and its Meaning after Legislative Reform “To Register or Not Register THAT is the question?” MR. JACEK SKOWRONSKI Director, Employee Benefits AMPLICO Life, Warsaw

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ESSENTIAL HR UPDATE New Developments in Employee Benefits and Labor Law

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  1. ESSENTIAL HR UPDATENew Developments in Employee Benefits and Labor Law Wednesday, November 24th, 2004 Warsaw, Poland PPE and its Meaning after Legislative Reform “To Register or Not RegisterTHAT is the question?” MR. JACEK SKOWRONSKI Director, Employee BenefitsAMPLICO Life, Warsaw Email: jacek.skowronski@amplicolife.pl Phone: +48-22-523-5425

  2. Today’s Topics • Polish economy and its impact on the labor market • How to retain employees ? • Why look at a pension plan ? • PPE vs. Non-registered pension plans

  3. General EconomicSituation • Growing economy (6% p.a.) • EU Accession: • New markets • Structural funds • Contributions • Microeconomic growth: • 73% of companies in Poland are profitable • 77 Billion PLN of free cash available for investment

  4. Polish Labor Market Trends • Investment boom • Decreasing unemployment • Growing demand for skilled labor • Exit of selected, highly educated specialists to EU countries Competition to hire and retain employees will increase dramatically!

  5. Compensation Life insurance Medical insurance Pensions Company cars Mobile phones Health club memberships, wellness programs, etc. How Best to Retain Employees?

  6. Why Implement a Pension Plan ? • Long term incentives- value growth • Tax incentives • Availability of funds for employees • Possibility to include Life coverage • Flexibility and options in benefit design • Growing awareness of employees about future pension benefits from 1st and 2nd pillar

  7. Future Pension Benefits

  8. PPE’s Old Story • 207 Programs Registered (less than 150 companies) • 96,500 Participants(1% of labor force)

  9. PPE’s Old Story • Reason for employers lack of interest in PPE: • Unfavorable PPE regulations • Long and troublesome registration processes with KNUiFE • General economic situation

  10. PPE’s New Story • Employer can now suspend or terminate plan • Money can be transferred to IKE and from IKE to PPE • Flexibility of PPE regulations • Registration process (?)

  11. Registered (PPE) vsNon-Registered • Social Security Tax exemption on employers’ contribution (up to 7%of salary) • Capital Income Taxexemption for those who wait until 60 years of age vs.Flexibility of Non-Registered Pension Plan Design

  12. Greater Flexibility in Non-Registered Pension Plans • Availability of Vesting • Option of Matching Contributions • Possibility of Eligibility Requirements • Life insurance coverage not capped • Possibility of withdrawals • Additional employee contributions without IKE limit allowed • Termination doesn’t require employees’ approval

  13. Conclusion • Competition to hire and retain employees will increase • Pension plans are very good retention tools

  14. To Register or Not Register That was the question And Today’s answer may be “IT’S UP TO YOU” Thank you.

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