As of April 1, 2025, Polish retirees will face a significant reduction in their pension benefits due to updated life expectancy tables released by the Main Statistical Office (GUS) on March 25, 2025. The new tables indicate that Poles are living longer, which directly impacts the amount of pension they will receive. The changes are expected to affect those retiring between April 2025 and March 2026.
The GUS reported that the average life expectancy for 60-year-olds has risen to 22.2 years, while for 65-year-olds, it stands at 18.4 years. This increase means that, on average, a 60-year-old can expect to live an additional 2.2 months longer compared to previous estimates, while a 65-year-old's life expectancy has increased by 1.9 months. These adjustments will lead to lower monthly pension payouts as the Zakład Ubezpieczeń Społecznych (ZUS) calculates pension amounts based on the total capital accumulated during a person's working life divided by their projected lifespan in months.
According to ZUS, the formula for calculating pensions is straightforward: the total pension capital is divided by the average further life expectancy. Iwona Kowalska-Matis from the Lower Silesian ZUS explained, "The larger the numerator and the smaller the denominator, the higher the pension amount will be." Thus, with the life expectancy increasing, the denominator grows, resulting in lower monthly benefits.
For instance, a woman who has accumulated 600,000 PLN and retires after reaching the minimum retirement age would receive a monthly benefit of 2,273 PLN. However, if she waits until after April 1, her pension would drop to approximately 2,253 PLN. Similarly, a 70-year-old man with a 700,000 PLN pension capital will see a reduction of 34 PLN per month, which amounts to over 400 PLN less annually.
The implications of these changes are significant. As the population ages and life expectancy increases, many are left wondering how to prepare for a financially secure retirement. The GUS's findings underscore the importance of accumulating sufficient capital for retirement. Kowalska-Matis emphasized, "The best way to ensure a higher pension is to work longer. Our calculations show that each additional year of professional activity can increase the pension by several percent." This suggests that delaying retirement could be a beneficial strategy for many.
Moreover, ZUS conducts an annual indexation of accumulated contributions, which is scheduled for mid-year. This year, the indexation could reach as much as 14 percent. For example, a person with 500,000 PLN in contributions could potentially gain an additional 70,000 PLN after this adjustment. This increase could help mitigate the effects of the new life expectancy tables.
As the new tables take effect, retirees and those approaching retirement age are encouraged to consider their options carefully. Delaying the application for retirement benefits until after the mid-year indexation could lead to more favorable outcomes. By waiting until July, individuals may capitalize on the increased contributions, which could offset some of the losses from the lower pension calculations.
In summary, the new life expectancy tables highlight a growing trend in Poland: people are living longer, but this longevity comes at a cost to their pension benefits. As the ZUS prepares to implement these changes, it is crucial for individuals to be proactive in managing their retirement plans. With careful planning and consideration of working longer, retirees can better navigate the challenges posed by these new calculations.
