As at the end of 2020, assets under management of domestic mutual funds were nearly PLN 280.5 billion, compared to 268.0 billion at the end of 2019, representing an increase by 4.7%.
In 2020, according to data by Analizy Online, the balance of payments to and withdrawals from retail funds offered by TFIs in the domestic market stood at PLN 0.1 billion. This low sales result was caused mainly by the massive fund outflows in March and April (PLN 23.1 billion in total) in response to the panic behavior of capital markets in connection with the start of the COVID-19 pandemic in Poland. From May to December positive fund flows gradually increased, thanks to which the year ended with net inflows.
As a result of low interest rates on bank deposits from May to the end of 2020, debt funds were the most popular, but despite that, as a result of March and April outflows they recorded negative flows (PLN -2.7 billion). In 2020, the importance of Employee Capital Scheme (ECS) funds increased – they are, by nature, resistant to the market situation thanks to systematic payments made by employees, employers and the State Treasury. These funds attracted the most money in 2020 (over PLN 2 billion). Net inflows were also recorded by mixed funds (PLN 1.7 billion) and commodity funds (PLN 0.6 billion).
According to the Polish Financial Supervision Authority, the net asset value of the defined date funds under the ECS system at the end of 2020 was over PLN 2.8 billion. Net asset value of the defined date funds in the ECS system operated only by mutual fund management companies (TFI), without universal pension fund management companies (PTE) and insurance undertakings (ZU), at yearend 2020 stood at PLN 2.3 billion.
Source: KNF, net asset value of Defined Date Funds (FZD) according to management institutions, data for TFI only, without PTE and TU
Date of record for determining the number of employees
Start of application of the regulations
|Time limit for signing contracts|
|for management of an ECS||for maintenance of an ECS|
|I||at least 250 persons||31 December 2018||1 July 2019||until 25 October 2019||until 12 November 2019|
|II||50 – 249 persons||30 June 2019||1 January 2020||until 27 October 2020||until 10 November 2020|
|III||20 – 49 persons||31 December 2019||1 July 2020||until 27 October
|until 10 November 2020|
|public finance sector entities (regardless of the number of employees)||
1 January 2021
|until 26 March 2021||until 10 April 2021|
|other employers||until 23 April 2021||until 10 May 2021|
Employee Capital Schemes are voluntary long-term savings programs for employee. Money on the employee’s ECS account comes from three sources:
The basic contribution, i.e. the employee’s mandatory payment, equals 2% of his/her monthly salary forming the basis for calculation of contributions for retirement and disability insurance. It may be lower (however not lower than 0.5%) if the employee’s salary earned in the month from different sources does not exceed 1.2 times the minimum wage. An employee may also declare a voluntary contribution in the amount of up to 2% of his/her salary.
The basic (mandatory) contribution from the employer, equals 1.5% of the employee’s monthly salary forming the basis for calculation of contributions for retirement and disability insurance. The amount of the employer’s additional (voluntary) contribution is up to 2.5% of the employee’s salary.
The money collected on the ECS account, coming both from own contributions and from contributions made by the employer and State Treasury subsidies, are fully owned by the employee and are inherited. The idea behind ECS is to accumulate savings for the future, when the employee turns 60. He/she may withdraw the money at any time before but will lose the State Treasury subsidies and will have to pay the capital gains tax.
Employee savings accumulated in the ECS are invested in defined date funds, that is funds with a specific investment target date, which will be close to the participant’s expected retirement date. Depending on the participant’s age, the degree of risk is modified: initially, funds are invested in more risky assets (such as equities), and over time they are switched to safer assets (such as bonds).
The ECS are introduced in stages. In the first stage, started on 1 July 2019, the reform covered employers with more than 250 people, followed by other groups in the next periods.
In connection with the outbreak of the COVID-19 pandemic, the final deadline for signing ECS management contracts by companies employing from 50 to 249 people (II stage of the reform) was postponed by half a year relative to the earlier deadline to 27 October 2020.
ECS may be managed and operated only by companies entered in the records kept by the Polish Development Fund. As at the end of December 2020, there were 20 such institutions: 16 TFIs, 3 PTEs and 1 ZU (Towarzystwo Ubezpieczeń na Życie).
Towarzystwo Funduszy Inwestycyjnych PZU (TFI PZU) operates on the mutual fund market in the PZU Group. TFI PZU offers products and services for retail and institutional clients. It also operates investment and saving programs under the third pillar of the social security system:
As at the end of 2020, TFI PZU had 50 funds and sub-funds in its portfolio, including 9 ECS sub-funds.
In 2020 the offer of specialized open-end mutual funds inPZU SFIO was strongly developed. These funds are available on the online platform inPZU.pl. Clients were offered new passive strategies based on cooperation with such partners as the Warsaw Stock Exchange and Goldman Sachs Asset Management, as well as actively managed ‘lifecycle” funds with investment policy changing over time, adapted to savings for pension. TFI PZU also offers intensively developed managed account services.
As at the end of 2020, TFI PZU managed a portfolio of net assets worth PLN 23.4 billion, representing a 10.5% increase from the end of 2019 and an 8.36% share in the mutual fund market. Accordingly, TFI PZU reached the status of one of the three largest mutual fund companies in Poland (it was ranked third according to reports published by the Chamber of Fund and Asset Management (IZFiA).
The largest increase in TFI PZU assets was posted by the following funds: PZU Papierów Dłużnych POLONEZ (up PLN 632 million), inPZU Inwestycji Ostrożnych (up PLN 254 million), PZU Stabilnego Wzrostu MAZUREK (up PLN 178 million), PZU SEJF+ (up PLN 168 million), PZU Akcji KRAKOWIAK (up PLN 139 million), PPK inPZU 2035 (up PLN 72 million), PPK inPZU 2040 (up PLN 68 million), PZU FIZ AKORD (up PLN 65 million), PPK inPZU 2030 (up PLN 61 million) and PPK inPZU 2045 (up PLN 60 million).
The following funds recorded the largest decreases in net assets at yearend 2020: PZU Obligacji Krótkoterminowych, inPZU Obligacje Polskie, inPZU Akcje Rynków Rozwiniętych, inPZU Akcje Polskie and PZU FIZ FORTE.
Changes in the asset value of individual funds were driven predominantly by:
TFI PZU is the leader in the pension product segment. At yearend 2020, it accumulated net assets in the amount of PLN 5.1 billion in Employee Pension Schemes.
TFI PZU is also one of the leaders of the Employee Capital Schemes market. The amount of assets accumulated in ECS funds managed by TFI PZU stood at PLN 392.2 million, which accounted for nearly 17% of the market (according to Chamber of Fund and Asset Management’s report) as at end of 2020. By 22 January 2021, ECS management agreements were signed with TFI PZU by over 35 thousand employers. This result is attributable to, among others, the broad support that TFI PZU offers to employers in deployment and service of ECS. They may use a free online service for remote conclusion of ECS management and operation agreements and daily service of ECSs. After the outbreak of the pandemic TFI PZU also introduced the possibility of entering into ECS agreements by phone.
The condition and performance of the market for mutual funds and Employee Capital Schemes will depend mainly on the following: