Polish pension anomalies: Waiting for reform
A recent, almost absurd but individually tragic case highlighted the unsustainability of the Polish pension system. Most problems concern the pensions of entrepreneurs and self-employed individuals.
The case that attracted significant media attention involved a businesswoman named Aldona, who was deprived by the ZUS (Social Insurance Institution) of 600,000 zlotys in paid pension contributions—350,000 zlotys of which were old-age pension contributions. Despite 20 years of employment and regular contributions, she received no pension because ZUS retroactively deemed some of her insurance relationships invalid. The case underscores the risks inherent in the current structure of the Polish pension system and the uncertainty of its regulations.
The characteristics of the Polish pension system
Today, the Polish pension system operates as a mixed system, combining the classic state pay-as-you-go model with elements of the former private pension funds (OFE), most of which were transferred back into the state system or individual accounts after 2020.
The central institution is the Zakład Ubezpieczeń Społecznych (ZUS), which manages social security contributions, including old-age pension contributions. Eligibility in the system depends on age—currently 60 for women and 65 for men—and proof of a minimum insurance period.
The core of the Polish system is that contributions are not accumulated as personally invested assets in an “individual account,” but current pensions are paid from the contributions of active workers (classic pay-as-you-go model). This also means that ZUS records contributions in technical accounts but does not guarantee a 1:1 return of the paid amount.
Contributions under review: Reforms expand the powers of the pension authority
In recent years, the Polish government has implemented significant reforms, partly as part of the “Polski Ład” tax and contribution system changes. As a result, ZUS’s authority and legal flexibility expanded, including the power to retroactively review certain contributions and their legality, even years later. This led to the Aldona case, in which ZUS determined that some insurance relationships were invalid.
Legal experts have criticized this practice, as ZUS is allowed by law to refund overpaid contributions within five years, but current regulations allow retroactive adjustments even after this period. This practice can affect many who have paid contributions for years without receiving any notice from ZUS that a given insurance relationship might be disputed.
Further debates surround the level of contributions calculated for entrepreneurs and small companies and their long-term sustainability. Some argue that high ZUS contributions and the method for determining the contribution base create difficulties for small and medium-sized enterprises and provide little incentive for active self-provision.
The current structure of the Polish pension system thus creates a situation in which contributions are not automatically refundable “savings” but items subject to retroactive review at ZUS’s administrative discretion. This practice is particularly sensitive for those who paid contributions through their own business or multiple insurance relationships, as ZUS can later clarify or challenge their legality.
