"Those who will retire in the second half of 2019 may gain about 500 PLN yearly because of a growing group of immigrants working in Poland. Why? This is a direct result of the statutory method of valorisation of capital for our future pension benefits," writes Marcin Lipka, Conotoxia Senior Analyst.
Immigrants coming to Poland are important for supporting the national economy. Most of them are young and willing to work, which decreases the negative economic effects of the ageing Polish society. Additionally, they also help companies that have problems with finding qualified workers.
In addition, Ukrainians, Belarusians and Asian citizens who come to Poland also have an impact on the newly granted retirement benefits. The overall effect of this impact will be already visible from the second half of 2019 when the pension account valorisation will take into account all the years when the inflow of immigrants was at the highest. A dose of happiness for pensioners
People who are close to retirement age can be very happy. A good economic situation increases employment and wages, and thanks to that more money goes to ZUS (Social Insurance Institution). This also applies to pension insurance contributions.
According to the Social Insurance Fund Pensions Act (Article 25(6)), the valorisation of initial capital (what we collected before 1999) and pension contributions depend on inflation and a real increase in the total written premium income by all insured people.
According to data from the Social Insurance Institution (ZUS), in 2016-2017, the valorisation index amounted to 106.37% and 108.68%, respectively. This means that the pension capital (excluding the sub-account, which, however, slightly increases the retirement benefit) was increased by 6.37% and 8.68%. It can be expected that a similar result by 2017 will also be achieved in 2018, taking into account the inflows to ZUS in three quarters of this year. However, to what extent have immigrants contributed to the increase in the valorisation index?
Increase in social security contributions due to immigrants
NBP data (Presentation of the Inflation Projection of November 13th this year) shows that Ukrainians increased the total number of employees by 0.8% both in 2016 and 2017. Furthermore, taking into account the data of foreign insured people in ZUS, a similar increase was also maintained in 2018.
Due to immigrants, the number of employed and paying pension contributions in Poland in 2016-2018 will increase by about 2.5%. The hourly wages of these people are probably lower than the average in Poland, but as they work more than Poles (54 hours a week in the Warsaw area - according to the NBP survey "Ukrainian citizens working in Poland") and are employed in larger cities, we can assume that their financial contribution to ZUS is similar to the average for a Polish citizen.
It also shows that immigrants could increase the ZUS pension fund by about 2.5% in three years. Since the valorisation of the pension account depends on the increase in the real amount of premiums written, immigrants will significantly increase pensions for those who will switch to ZUS benefits from July 2019.
Higher benefits by 500 PLN per year
ZUS data shows that the average pension granted in 2017 amounted to 2156 PLN gross. With the average age of retirement (62.3 years for men and women) and the number of months of life expectancy of a pensioner (243 - according to GUS tables), the accumulated statistical capital of the pensioner slightly exceeds 500,000 PLN.
At least 80% of the funds are accumulated in the part of the initial capital and pension contributions (without the sub-account), which means that the valorisation factor for about 400,000 PLN collected in the Social Insurance Institution depends on the inflows of immigrants.
Therefore, the inflow of Ukrainians and Belarusians in 2016-2018 will increase the capital of the average pension transferred to ZUS from the second half of 2019 by about 10,000 PLN (2.5% from 400,000 PLN). Since the anticipated life expectancy of an average pensioner (from 62 years of age) is about 20 years, the benefit will increase by about 500 PLN a year, thanks to the inflow of immigrants over the last 3 years.