Determining the amount of farmers’ old-age pensions or farmers’ disability pensions

Farmers’ old-age pensions, farmers’ disability pensions for incapacity for work and farmers’ training pensions are composed of a contributory and supplementary part.

The sum of both parts is the full amount of the old-age pension/disability pension. A calculation index is determined for each of these parts.

The calculation index is a figure determined for the old-age pension/disability pension, expressing a fixed ratio of the pension benefit (contributory/supplementary part) to the basic old-age pension, rounded to two decimal places.

Farmers’ old-age pensions, farmers’ disability pensions for incapacity for work and farmers’ training pensions are composed of a contributory and supplementary part.

Contributory part

The contributory part is determined by assuming 1% of the basic old-age pension (PLN 972.40 from 1 March 2020 to 28 February 2021) for each year of pension insurance coverage. Added to this number of years are, inter alia:

the number of years of being covered by farmers’ social insurance between 1 January 1983 and 31 December 1990 – 1% of the basic old-age pension for each year (more than 1% if an annual contribution higher than 120% of the average basic old-age pension in the year concerned was paid),
the number of years of running an agricultural holding or working on a holding between 1 July 1977 and 31 December 1982, for which contributions to the Farmers’ Pension Fund were paid – 1% of the basic old-age pension for each year,
the number of years of running an agricultural holding or working on a holding – without being covered by another social insurance – after reaching the age of 16 before 1 July 1977, but not earlier than 25 years before the conditions for obtaining the right to a farmer’s old-age pension or farmer’s disability pension are met – 0.5% of the basic old-age pension for each year (this provision has practically been a dead letter since 1 July 2002),
the number of years of being covered by another insurance (unless the insured person has been awarded the old-age pension or disability pension under separate provisions), which is calculated on a one-and-a-half-times basis.

The periods referred to in point 4 are not taken into account when determining the amount of the farmer’s old-age pension (also the ‘early’ pension) for persons born after 31 December 1948. This change was introduced by the Funded Old-Age Pensions Act of 21 November 2008 and has been in force since 8 January 2009.

The contributory part is determined by assuming 1% of the basic old-age pension (PLN 938.97 from 1 March 2019 to 29 February 2020) for each year of pension insurance coverage. Added to this number of years are, inter alia:

the number of years of being covered by farmers’ social insurance between 1 January 1983 and 31 December 1990 – 1% of the basic old-age pension for each year (more than 1% if an annual contribution higher than 120% of the average basic old-age pension in the year concerned was paid),
the number of years of running an agricultural holding or working on a holding between 1 July 1977 and 31 December 1982, for which contributions to the Farmers’ Pension Fund were paid – 1% of the basic old-age pension for each year,
the number of years of running an agricultural holding or working on a holding – without being covered by another social insurance – after reaching the age of 16 before 1 July 1977, but not earlier than 25 years before the conditions for obtaining the right to a farmer’s old-age pension or farmer’s disability pension are met – 0.5% of the basic old-age pension for each year (this provision has practically been a dead letter since 1 July 2002),
the number of years of being covered by another insurance (unless the insured person has been awarded the old-age pension or disability pension under separate provisions), which is calculated on a one-and-a-half-times basis.

* In accordance with the Communication from the President of the Agricultural Social Insurance Fund (Kasa Rolniczego Ubezpieczenia Społecznego, KRUS) of 18 February 2020 (Polish Official Gazette (Monitor Polski) 2020, item 194), since 1 March 2020 the amount of the basic old-age pension has been PLN 972.40.

Supplementary part

The supplementary part constitutes 95% of the basic old-age pension if the number of years adopted to determine the contributory part is lower than 20. For each full year above 20 years adopted for the purposes of the contributory part, the supplementary part is reduced by 0.5% of the basic old-age pension.

The supplementary part cannot be lower than 85% of the basic old-age pension, and the sum of the contributory and supplementary parts cannot be lower than the basic old-age pension.

An exception is when a farmer has obtained the right the ‘early’ farmer’s old-age pension. In such a case, the supplementary part is reduced by 5% of the basic old-age pension for each full year remaining until the general retirement age. The supplementary part determined in this manner is then increased by 5% of the basic old-age pension after the end of each full year remaining until retirement age.

Raising farmers’ old-age pensions and disability pensions to the amount of the lowest old-age pension

If the amount of the old-age pension, disability pension for incapacity for work and survivor’s pension awarded since 1 March 2020 is lower than the amount of the lowest old-age pension, i.e. PLN 1 200.00, the amount of such a benefit is increased to PLN 1 200.00.

The following benefits are not increased to PLN 1 200.00:

a) early farmers’ old-age pensions,

b) benefits whose payment has been suspended for persons carrying out agricultural activities or generating revenues from employment,

c) old-age pensions and disability pensions under an insurance scheme received concurrently with old-age pensions or disability pensions under another social insurance scheme (this applies also to old-age pensions received concurrently from the Social Insurance Institution (Zakład Ubezpieczeń Społecznych, ZUS) and the KRUS), if the sum of these benefits exceeds the amount of the lowest old-age pension, except for survivor’s pensions paid concurrently with social pensions,

d) pro-rata old-age pensions and disability pensions.

The increase to PLN 1 200.00 constitutes a separate part of the benefit and is not added either to the contributory part or to the supplementary part.

Example 1

A farmer, born on 7 October 1948, made the agricultural holding over to another person in December 2019 and applied for a farmer’s old-age pension in March 2020. The person in question has demonstrated that he has completed the following periods of insurance:

from 8 October 1964 to 30 June 1969 – work on the parents’ agricultural holding; in the case of the applicant, this period does not affect the amount of the farmer’s old-age pension (it is taken into account only when determining the right to this benefit),
from 1 July 1969 to 30 June 1977 – a period of employment outside agriculture – 8 years (this period is converted on a one-and-a-half-times basis and amounts to 12; it is calculated according to the index of 1% of the basic old-age pension – 12%),
from 1 July 1977 to 31 December 1982 – work on the farmer’s own agricultural holding – 5 years and 6 months (period calculated according to the index of 1% of the basic old-age pension – 5.5%),
from 1 January 1983 to 31 December 1990 – work on the farmer’s own agricultural holding – 8 years (period calculated according to the index of 1% of the basic old-age pension – 8%),
from 1 January 1991 to 31 December 2019 – work on the farmer’s own agricultural holding – 29 years (period calculated according to the index of 1% of the basic old-age pension – 29%).

The person in question meets the conditions for receiving a farmer’s old-age pension as he has reached the retirement age of 65 and has completed the required period of insurance of at least 25 years.

The amount of the contributory part: 54.5% (12% + 5.5% + 8% + 29%) x PLN 972.40 (the amount of the basic old-age pension applicable from 1 March 2020 to 28 February 2021) = PLN 529.96.

As the number of full years adopted to determine the contributory part is 54, the supplementary part (95% of the basic old-age pension) is reduced by 17.5% of the basic old-age pension /(54 - 20) x 0.5%/. In addition, the supplementary part cannot be lower than 85% of the basic old-age pension.

The amount of the supplementary part: 85% x PLN 972.40 (the amount of the basic old-age pension applicable from 1 March 2020 to 28 February 2021) = PLN 826.54.

The amount of the farmer’s old-age pension is PLN 529.96 + PLN 826.54 = PLN 1 356.50 gross (total amount of the contributory and supplementary parts). Advance income tax and the health insurance contribution are deducted from the benefit.

Advance income tax:

PLN 1 357 (rounded to the nearest zloty) x 17% - PLN 43.76 (relief) = PLN 186.93

The total amount of the health insurance contribution: PLN 1 356.50 x 9% = PLN 122.09

The amount of the health insurance contribution by which advance income tax is reduced (paid to the National Health Fund (Narodowy Fundusz Zdrowia, NFZ)): PLN 1 356.50 x 7.75% = PLN 105.13

The amount of the health insurance contribution financed from the benefit (deducted from the net amount of the benefit): PLN 122 (rounded to the nearest zloty) - PLN 105.13 = PLN 16.87

The amount of income tax paid to the revenue office: PLN 186.93 - PLN 105.13 = PLN 81.80 ~ PLN 82 (rounded to the nearest zloty)

The benefit to be paid PLN 1 356.50 - PLN 82 - PLN 105.13 - PLN 16.87 = PLN 1 152.50.

Example 2

A farmer, born on 27 February 1960, applied for a farmer’s old-age pension in March 2020. The person in question has demonstrated that she has completed the following periods of insurance:

from 28 February 1976 to 30 June 1977 – work on the parents’ agricultural holding – in the case of the applicant, this period does not affect the amount of the farmer’s old-age pension (it is taken into account only when determining the right to this benefit),
from 1 July 1977 to 31 December 1982 – work on the parents’ agricultural holding – as there is no confirmation that the parents paid contributions in this period, it does not affect the amount of the applicant’s farmer’s old-age pension (it will be taken into account when determining the right to this benefit),
from 1 January 1983 to 31 August 2000 – a period of employment outside agriculture; in the case of the applicant (born after 31 December 1948), this period does not affect the amount of the farmer’s old-age pension (and it is not taken into account when determining the right to this benefit),
from 1 March 2001 to 29 February 2020 – work on the farmer’s own agricultural holding – 19 years (period calculated according to the index of 1% of the basic old-age pension – 19%).

The person in question meets the conditions for receiving a farmer’s old-age pension as she has reached the retirement age of 60 and has completed the required period of farmer’s pension insurance of at least 25 years.

The amount of the contributory part: 19% x PLN 972.40 (the amount of the basic old-age pension applicable from 1 March 2020 to 28 February 2021) = PLN 184.76.

As the number of full years adopted to determine the contributory part is 19, the supplementary part (95% of the basic old-age pension) is not reduced.

The amount of the supplementary part: 95% x PLN 972.40 (the amount of the basic old-age pension applicable from 1 March 2020 to 28 February 2021) = PLN 923.78.

The amount of the farmer’s old-age pension is PLN 184.76 + PLN 923.78 = PLN 1 108.54 gross (total amount of the contributory and supplementary parts). As the old-age pension is lower than PLN 1 200.00, it will be increased to PLN 1 200.00.

Advance income tax and the health insurance contribution are deducted from the benefit on the terms described in example 1.

Example 3

A farmer, born on 1 September 1962, ceased to carry out agricultural activities in December 2017 and applied for the early farmer’s old-age pension in March 2020. The person in question has demonstrated that she has completed the following periods of insurance:

from 1 September 1981 to 31 December 1987 – a period of employment outside agriculture; in the case of the applicant (born after 31 December 1948), this period does not affect the amount of the farmer’s old-age pension (and it is not taken into account when determining the right to this benefit),
from 1 January 1988 to 31 December 1990 – work on the farmer’s own agricultural holding – 3 years (period calculated according to the index of 1% of the basic old-age pension – 3%),
from 1 January 1991 to 31 December 2017 – work on the farmer’s own agricultural holding – 27 years (period calculated according to the index of 1% of the basic old-age pension – 27%).

The person in question meets the conditions for receiving the early farmer’s old-age pension as she reached the age of 55 by 31 December 2017, has completed the required period of farmer’s pension insurance of at least 30 years and has ceased to carry out agricultural activities.

The amount of the contributory part: 30% (3% + 27%) x PLN 972.40 (the amount of the basic old-age pension applicable from 1 March 2020 to 28 February 2021) = PLN 291.72.

As the number of full years adopted to determine the contributory part is 30, the supplementary part (95% of the basic old-age pension) is reduced by 5% of the basic old-age pension /(30 - 20) x 0.5%/. Furthermore, the supplementary part will be reduced by 15% of the basic old-age pension, i.e. by 5% of the basic old-age pension for each full year remaining until retirement age /(60 years - 57 years) x 5%/.

The amount of the supplementary part: 75% (95% - 5% - 15%) x PLN 972.40 (the amount of the basic old-age pension applicable from 1 March 2020 to 28 February 2021) = PLN 729.30.

The amount of the farmer’s old-age pension is PLN 291.72 + PLN 729.30 = PLN 1 021.02 gross (total amount of the contributory and supplementary parts). As the early farmer’s old-age pension was applied for, it will not be increased to PLN 1 200.00.

Advance income tax and the health insurance contribution are deducted from the benefit on the terms described in example 1.

Examples of the calculation of the farmer’s old-age pension, taking into account periods of employment abroad (in Germany)

Example 1

from 8 October 1964 to 30 June 1977 – work on the parents’ agricultural holding; in the case of the applicant, this period does not affect the amount of the farmer’s old-age pension (it is taken into account only when determining the right to this benefit),
from 1 January 1979 to 31 December 1986 – a period of employment outside agriculture – 8 years (this period is converted on a one-and-a-half-times basis and amounts to 12; it is calculated according to the index of 1% of the basic old-age pension – 12%),
from 1 January 1988 to 31 December 1991 – a period of employment in Germany – 4 years (period calculated according to the index of 1% of the basic old-age pension – 4%),
from 1 January 1994 to 31 December 2019 – work on the farmer’s own agricultural holding – 26 years (period calculated according to the index of 1% of the basic old-age pension – 26%).

Calculation of the amount of the Polish farmer’s old-age pension:

− periods in Poland calculated according to the percentage of 38% (26% + 12%),

The amount of the contributory part: 38% x PLN 972.40 (the amount of the basic old-age pension applicable from 1 March 2020 to 28 February 2021) = PLN 369.51

As the number of full years adopted to determine the contributory part is 38, the supplementary part (95% of the basic old-age pension) is reduced by 9% of the basic old-age pension /(38 - 20) x 0.5%/.

The amount of the supplementary part: 86% x PLN 972.40 (the amount of the basic old-age pension applicable from 1 March 2020 to 28 February 2021) = PLN 836.26

The amount of the Polish farmer’s old-age pension is PLN 369.51 + PLN 836.26 = PLN 1 205.77 gross (total amount of the contributory and supplementary parts).

Calculation of the amount of the pro-rata farmer’s old-age pension

Theoretical old-age pension:

periods in Poland calculated according to the percentage of 38% (26% + 12%),
periods in Germany calculated according to the percentage of 4%

The amount of the contributory part: 42% (38% + 4%) x PLN 972.40 (the amount of the basic old-age pension applicable from 1 March 2020 to 28 February 2021) = PLN 408.41

As the number of full years adopted to determine the contributory part is 42, the supplementary part (95% of the basic old-age pension) is reduced by 11% of the basic old-age pension /(42 - 20) x 0.5%/. In addition, the supplementary part cannot be lower than 85% of the basic old-age pension.

The amount of the supplementary part: 85% x PLN 972.40 (the amount of the basic old-age pension applicable from 1 March 2020 to 28 February 2021) = PLN 826.54

The amount of the theoretical old-age pension is PLN 408.41 + PLN 826.54 = PLN 1 234.95 gross (total amount of the contributory and supplementary parts).

Actual (pro-rata) old-age pension:

PLN 1 234.95 x 0.89 (ratio of the partial old-age pension) = PLN 1 099.11 gross

The ratio results from the following proportion:

408 months of insurance in Poland
............................................................................ = 0.89
408 months of insurance in Poland + 48 months of insurance in Germany

The amount of the pro-rata old-age pension is PLN 1 099.11 gross.

As the Polish old-age pension (PLN 1 205.77 gross) is higher than the pro-rata old-age pension (PLN 1 099.11 gross), the KRUS will award the Polish farmer’s old-age pension, as the more favourable benefit. Advance income tax and the health insurance contribution will be deducted from the benefit on the terms described above.

Example 2

A farmer, born in February 1960, applied for a farmer’s old-age pension in March 2020. The person in question has demonstrated that she has completed the following periods of insurance:

from 1 July 1976 to 30 June 1977 – work on the parents’ agricultural holding; in the case of the applicant, this period does not affect the amount of the farmer’s old-age pension (it is taken into account only when determining the right to this benefit),
from 1 July 1977 to 31 December 1989 – work on the farmer’s own agricultural holding – 12 years and 6 months (period calculated according to the index of 1% of the basic old-age pension – 12.5%),
from 1 September 1990 to 31 August 2002 – a period of employment outside agriculture; in the case of the applicant (born after 31 December 1948), this period does not affect the amount of the farmer’s old-age pension (and it is not taken into account when determining the right to this benefit),
from 1 September 2002 to 31 August 2010 – a period of employment in Germany – 8 years (period calculated according to the index of 1% of the basic old-age pension – 8%),
from 1 September 2011 to 29 February 2020 – work on the farmer’s own agricultural holding – 8 years and 6 months (period calculated according to the index of 1% of the basic old-age pension – 8.5%).

As the person in question has completed a period of farmer’s pension insurance of 22 years, she does not meet the conditions for receiving the Polish farmer’s old-age pension, but meets those for receiving the pro-rata farmer’s old-age pension.

Calculation of the amount of the pro-rata farmer’s old-age pension

Theoretical old-age pension:

− periods in Poland calculated according to the percentage
− 21% – periods in Germany calculated according to the percentage of 8%

The amount of the contributory part: 29% (21% + 8%) x PLN 972.40 (the amount of the basic old-age pension applicable from 1 March 2020 to 28 February 2021) = PLN 282.00

As the number of full years adopted to determine the contributory part is 29, the supplementary part (95% of the basic old-age pension) is reduced by 4.5% of the basic old-age pension /(29 - 20) x 0.5%/.

The amount of the supplementary part: 90.5% x PLN 972.40 (the amount of the basic old-age pension applicable from 1 March 2020 to 28 February 2021) = PLN 880.02

The amount of the theoretical old-age pension is PLN 282.00 + PLN 880.02 = PLN 1 162.02 gross

Actual (pro-rata) old-age pension:

PLN 1 162.02 x 0.72 (ratio of the partial old-age pension) = PLN 836.65 gross

The ratio results from the following proportion:

252 months of insurance in Poland
.................................................................... = 0.72
252 months of insurance in Poland + 96 months of insurance in Germany

The amount of the pro-rata old-age pension is PLN 836.65 gross.

Determining the amount of the periodic farmer’s old-age pension

The periodic farmer’s old-age pension is equal to the basic old-age pension (PLN 972.40 from 1 March 2020 to 28 February 2021).

As the amount of the periodic farmer’s old-age pension is lower than the amount of the lowest occupational pension (PLN 1 200.00 since 1 March 2020), it will be increased to PLN 1 200.00.

Advance income tax and the health insurance contribution are deducted from the benefit on the terms described above.