- The ZUS sub-account is a kind of saving method. This variant arose as a result of a reduction in contributions paid under OFE
- A special account at the Social Insurance Institution (ZUS) records key information concerning the valorized amount of the money paid in together with the interest due
- The money collected on the sub-account is inheritable. After the death of their owner, each entitled heir may submit an application to the Social Insurance Institution for the payment of these accumulated funds.
Since 1999, in accordance with the assumptions of the pension system in force in Poland, the amount of the future monthly benefit depends on the amount that a citizen will accumulate over the years of work. To this day – although it is to change soon – the so-called Open Pension Funds, which receive funds paid by payers of social insurance contributions. Everyone has a choice whether they want to belong to an OFE or have an account only with the Social Insurance Institution. Since 2011, you can use the so-called ZUS sub-accounts.
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What is the ZUS sub-account?
ZUS sub-account it’s kind of a way to save. Although it has been operating in the Republic of Poland for a long time, many people still wonder what it really is. This variant arose as a result of a reduction in contributions paid under OFE. Own ZUS sub-account all people born after 1968, as well as those who are members of Open Pension Funds have.
It is worth knowing that the funds generated by citizens go there in the amount of 4.38 percent. the basis for assessing contributions, while 2.92 percent. is transferred to the OFE. A special account at the Social Insurance Institution (ZUS) records key information concerning the valorized amount of the money paid in together with the interest due. Importantly, the finances accumulated in the sub-account are not taxable and each year, on June 1, their value is adjusted to the change in purchasing power based on inflation data.
When is the withdrawal of funds from the sub-account and their distribution?
The law on the social insurance system also regulates the provisions on the retirement and disability pension system, specifying the circumstances in which funds on the ZUS sub-account may be divided. We are talking here primarily about divorce or marriage annulment – in such situations the money goes to the husband and wife. The same happens in the event of the termination of joint property or its limitation as a result of the contract, and also when the owner of the account dies.
The payment and distribution of funds belonging to the holder of the ZUS sub-account and at the same time of the OFE member must be preceded by an official notification, which should be sent from the OFE to ZUS within 14 days. The document provides detailed information on the people covered by the split, including their percentage share in the amount collected. The entire process takes a maximum of 3 months – ZUS is obliged to complete the procedure by then.
Are funds on the ZUS sub-account inheritable?
The money collected on the sub-account is inheritable. After the death of their owner, each entitled heir may submit an application to the Social Insurance Institution for the payment of these accumulated funds. In the case of a spouse, part of the contributions paid automatically went to him ZUS sub-account earlier, as a result of joint property, but he receives the remaining amount only after sending an appropriate letter to ZUS.
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It is worth knowing, however, that there are exceptions to this rule in the regulations. The funds set aside are not inherited, for example, when the holder of the ZUS sub-account has been receiving a retirement pension for a period of at least 3 years. Then he is deprived of the right to take over the money stored in a separate account – even if it concerns his spouse.
It is also worth mentioning the change of the place of money transfer. It occurs when the owner of the ZUS sub-account has previously submitted to his office a declaration of willingness to modify the rules of managing his finances – from the sub-account to the OFE or vice versa. The Social Insurance Institution accepts such applications every four years in the period from April 1 to July 31, and that’s when there is a chance to rebuild the system in line with the owner’s expectations.
Change of OFE to IKE – what about the funds accumulated on the sub-account?
The reform related to the liquidation of OFE and the creation of Individual Retirement Accounts gives the holders of the ZUS sub-account two different options for action. The owners will be able to decide to transfer all accumulated funds to ZUS or to the above-mentioned Individual Retirement Account. However, it must be remembered that when deciding on an IKE, the government will charge 15 percent. money as a fee for converting the model.
The choice of ZUS means that the owner will be forced to pay 17% income tax when transferring the savings. or 32 percent – depending on the applicable rate. The visible advantage of this solution, however, is the guarantee that the funds saved in ZUS will not lose their value due to valorization. However, the described rules may change in the coming months, as the modification of the pension system has not yet been fully completed.
ZUS sub-account – is it worth using?
For years, the ZUS sub-account has been an alternative to Open Pension Funds. It will still provide the possibility of using a form of saving other than the Individual Retirement Account. The answer to the question whether it is worth paying the earned money to the Social Insurance Institution depends on the payer’s decision. Undoubtedly, the ZUS sub-account fulfills its function as a model for collecting money for old age, but no larger amounts should be expected compared to OFE.
To sum up – it is impossible to say unequivocally which solution is better. Each choice involves losses, but on different levels. Therefore, you should not rush the decision and it is worth consulting it with your family or a financial specialist. Thanks to this, you will be sure about the rightness of your choice.