Social contributions and pension contributions in Poland: What employees and employers need to know

In Poland, the social security system is compulsory for all working citizens and provides protection against various life risks, from illness to retirement. Social contributions include pension, health and accident insurance. It is important for both employees and employers to understand what contributions are required, how they are calculated, and what role they play in the formation of retirement savings. In this article, we will look at the main aspects of the system of social contributions and pension contributions in Poland.

What are social contributions and what are their types in Poland?

Social contributions in Poland are mandatory deductions from the employee’s salary and at the expense of the employer, which are sent to the Social Insurance Institution (ZUS). The main types of social contributions include:

• Pension insurance (ubezpieczenie emerytalne ) – forms the main income of the employee after retirement.
• Disability insurance (ubezpieczenie rentowe ) – provides payments in case of disability or loss of ability to work.
• Health insurance (ubezpieczenie zdrowotne ) – provides access to medical services through the National Health Fund (NFZ).
• Sickness insurance (ubezpieczenie chorobowe ) – provides an employee with benefits in case of temporary disability.
• Accident insurance (ubezpieczenie wypadkowe ) – covers expenses in case of injuries or accidents at work.

Social security contributions are deducted from the employee’s salary and paid by the employer in a certain ratio established by law.

Distribution of social contributions between the employee and the employer

Social security contributions are paid by both the employee and the employer, but each type of contribution is allocated differently. In Poland, it looks like this:

• Pension insurance – 9.76% of the employee’s salary, of which 9.76% is paid by the employer and 9.76% is withheld from the employee.
• Disability insurance – 8%, of which 6.5% is paid by the employer and 1.5% by the employee.
• Medical insurance – 9% is deducted from the employee’s salary.
• Sickness insurance – 2.45%, fully covered by the employee.
• Accident insurance – from 0.67% to 3.33%, depending on the degree of risk of the job, paid in full by the employer.

This split means that the total amount of contributions is covered by both the employee and the employer and depends on the amount of salary.

Pension insurance and pension capital formation

In Poland, pension insurance is one of the most important components of the social security system. It provides employees with pension benefits upon reaching retirement age (60 years for women and 65 years for men).

Pension insurance is divided into two pillars:

• The basic level (ZUS): A portion of pension contributions is allocated to the Social Insurance Fund (ZUS), where the main savings for retirement are formed.
• Second pillar (OFE): A voluntary accumulation level through Open Pension Funds (OFE), which allow for additional accumulation of pension funds. Employees have the opportunity to choose one of the pension funds for additional contributions.

Employees can also take advantage of the Employee Pension Plan Program (PPK), where additional pension contributions are paid by the employer, the employee and partially by the state.

Health insurance and access to medical services

Health insurance is compulsory and everyone who pays social security contributions has access to public healthcare services through the National Health Fund (NFZ). The health insurance contribution is 9% of the employee’s salary.

Benefits of health insurance:

• Free access to public healthcare services, including medical consultations, inpatient treatment, laboratory tests and other types of medical care.
• The ability to visit public clinics and hospitals at no additional cost.

This insurance provides a basic level of medical services, but many employees also purchase private insurance for extended coverage.

Employer rights and obligations

Employers are obliged to register their employees with ZUS and pay the premiums by the 15th of each month for the previous month. The employer is responsible for the correct calculation and transfer of contributions and must comply with the following obligations:

• Registering an employee with ZUS: each new employee must be registered within 7 days of starting work.
• Calculation and payment of contributions: the employer is obliged to correctly calculate and transfer contributions.
• Reporting: submit monthly reports on the contributions paid to ZUS.

The employer is also entitled to participate in programs to reduce the tax burden, for example, to use tax benefits for new employees or to choose risk programs for employees with hazardous working conditions.

Social contributions for entrepreneurs

Entrepreneurs in Poland are also obliged to pay social contributions to ZUS. However, there are some simplifications for them:

• Grace period for new entrepreneurs: during the first 24 months, an entrepreneur can pay reduced contributions.
• Ulga na start: new entrepreneurs are entitled to exemptions from certain social contributions for the first 6 months of operation.
• Ability to choose the contribution rate: an entrepreneur has the right to choose the basis for calculating contributions, which affects their amount.

An important feature for entrepreneurs is that they have to calculate and pay their contributions on their own, while the employer does it for employees.

How social contributions are paid and reported to ZUS

Social security contributions are paid monthly to ZUS and reported through the electronic system PUE (Platforma Usług Elektronicznych).

• The deadline forpayment is the 15th of each month (for legal entities and employers) or the 10th of each month (for individuals and entrepreneurs).
• Electronic submission of reports – employers can submit reports through the ZUS platform, which facilitates data processing and reduces the likelihood of errors.