Summary of Social Security and Private Employee Benefits POLAND

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1 Private Employee Benefits POLAND 2014

2 Your Local Link to IGP in Poland: Pramerica Życie TUiR S.A. Pramerica Życie TUiR SA is a part of Prudential Financial*, Inc. (PFI), a financial services leader based in the United States. For over 135 years PFI has served millions of Clients on four continents in more than 40 countries all over the world. PFI assets under management amounted to $1.107 trillion at December 31, In Poland we have been present since 1999, offering individual and group life insurance. Our institutional Clients include large, medium and small enterprises. The quality of services provided to Customers is our top priority which is why every Client has a dedicated policy administrator; upon occurrence of insurable event, we pay the benefit the fastest on the market. Our commitment to the highest quality of Customer Service and insurance solutions has been noticed and recognized. Pramerica s parent company Prudential Financial, Inc. was ranked No 3 on FORTUNE magazine World s Most Admired Companies list in the Insurance: Life, Health category (March 17, 2014). Thanks to Pramerica expertise, we can deliver unique insurance solutions at competitive prices. In the Dread Disease Rider, we offer one of the most attractive catalogs of dread diseases and medical surgeries. We apply a very limited number of liability exclusions. We provide coverage for people who do extreme sports. We are the only company on the market which pays the benefit in the amount of 10 percent of the sum insured in the event of childbirth occurring during the waiting period. In the event of death of the person insured occurring within 30 days from the termination of group insurance, we pay the benefit to the beneficiary even if the premium has not been paid. We have broad geographical coverage in respect of hospitalization or medical surgery. * Prudential Financial, Inc. of the United States is not affiliated with Prudential plc. which is headquartered in the United Kingdom. For more information, see or International Group Program 1

3 Social Security Social insurance and social assistance are the primary instruments of the State s social policy. The Social Security system in Poland is regulated by the Social Security System Act ( ), which specifies the social insurance principles as well as the rules for setting premiums and benefits. The Social Security system includes: pension insurance, annuity insurance - disability insurance, sickness and maternity insurance - "sickness insurance" accident at work and occupational diseases insurance - "accident insurance". The Social Insurance Institution is the primary authority implementing the provisions of the Act on Insurance Benefits. Open Pension Funds and Pension Institutions are responsible for the execution of all tasks concerning the organization and operation of pension funds. Pension insurance concerns purely pension. Annuity insurance concerns annuity due to inability to work, training annuity, family annuity, care supplement to pensions and annuities, supplement for orphans, and funeral allowance. Sickness insurance concerns sickness allowance, maternity allowance, childbirth allowance, and rehabilitation benefit. Accident insurance concerns benefits due to accidents at work and occupational diseases. Social Security system insurance is compulsory for all persons in an employment relationship. Both employer and employee contribute to the Social Security system: EMPLOYER EMPLOYEE 6.5% DISABILITY PENSION 1.5% SICKNESS INSURANCE 2.45% 0.67% % ACCIDENT (INJURY) INSURANCE 9.76% PENSION INSURANCE 9.76% Main regulations of the pension system are outlined under the Social Security section International Group Program 2

4 Private Benefits Group Life Insurance: There are mainly two types of group life insurance offered in the Polish market one for small firms and another for larger groups. For each product, insurers define minimum enrollment requirements, i.e. a percentage of employees who have to participate in the insurance contract. Group insurance is characterized by a wide range of insurance covers tailored to the employer s and employees needs in order to protect the insured and his/her family members. It is typical and popular in Poland to include family risks in the employee s insurance plan. Thanks to a wide scope of risks covered, the plan can be adapted to the individual customer s needs, for example those arising from the kind of work performed. For standard group life insurance policies, the sum insured is typically denominated as an amount in PLN and is the same for the whole group. It is possible to specify the sum insured as a multiple of gross monthly salary of the insured. The premium is calculated individually for each group and is based on the sum insured, scope of risks, number of insured, age-sex structure of the group, and nature of work performed. A typical policy must include a benefit in case of death of the insured equal to the sum insured agreed upon. Options, with varying percentages of sum insured, include: death of the insured due to any accident, death of spouse, death of juvenile child of the insured, bereavement (of a juvenile child) caused by insured s death, total & permanent disability of the insured due to any cause, critical illness. Other risks offered: Partial permanent disability due to accident, daily hospital allowances, surgical operations, individual continuation of coverage (ICC). In Poland, it is most common for employees to pay the group life insurance premiums. Plans with wide family risks are typically employee-sponsored. Some insurers offer additional agreements for investment within the group insurance product, where part of the financial means is allocated to unit-linked funds International Group Program 3

5 Investment Fund within Group Life Insurance: A group investment fund can be set up solely in addition to group life insurance. It follows the rules of a defined contribution plan and is formed by investment premiums and increased with investment profits. The investment benefit is an accumulation of premium payments made on behalf of the employee, less plan operating costs, plus investment income. Benefits can be paid as an annuity or a lump sum. Investment benefits are paid independently of any group life insurance benefit. A life annuity is paid out upon reaching retirement age International Group Program 4