How does the Pension system work in Poland?
"Pretty simple actually. This is a state-run defined benefit plan, where the benefit is calculated based on the length of the employment and the contributed amounts. This is what in the US is known as the Social Security.  This is a defined contribution plan, where the employee can chose the level of risk based on certain pre-defined investment guidelines (more conservative or more aggressive). In Poland, it appears that there's a certain amount of the state-mandated SS tax is transferred to these plans. Nothing in the US is like that, but you can see it as a mandatory IRA with a preset limited choice of mutual funds to invest into, as an analogy. The recent change was to reduce the portion of the madatory contribution that is diverted to this plan from 7+% to 2.3% (on account of expanding the contribution to (1)). Probably the recent crashes of the stock markets that affected these accounts lead to this decision. This is voluntary defined contribution plan, similar to the US 401Ks. This division is actually pretty common, not unique to Poland. I'd say its the ""standard"" pension scheme, as opposed to what we're used to in the US." littleadv's answer gives a concise summary of the system as it stands now, but much more changed than just the portion of the mandatory contribution that was diverted to the private plan. In broad terms, the balances of your accounts and your future benefit won't change. It's only the source of these benefits that's changing. The Bloomberg article describes the changes this way: The state will take over the amount of bonds that pension funds held as of end of Sept. 3 and turn them into pension liabilities in the state-run social security system... The state will assume control of 51.5 percent of pension-fund assets, including bonds guaranteed by the government and “other non-stock assets” After the change, Polish workers that held bonds in the private portion of their retirement portfolios will instead have more payments from the state-run pension system. The balances of your retirement portfolio and your future benefits shouldn't change, but the reality may depend on how the state pension system is managed and any future changes the government implements. The effect this change will have on future benefits isn't clear, because the change may simply delay the problem of high levels of outstanding sovereign debt, not solve it. The government stated that because increasing numbers of workers invested their money in private pension funds, less money went into the government's fund, which forced them to issue sovereign debt in order to cover the shortfall in their current pension liabilities.  The government's recent cancellation of government bonds in the hands of private pensions will decrease their overall outstanding debt, but in exchange, the government is increasing its future pension liabilities. Years down the road, the government may find that they need to issue more sovereign debt to cover the increased pension liabilities they're taking on today. In other words, they may find themselves back in the same situation years down the road, and it's difficult to predict what changes they might make at that time.
PKO Bank polski has  a feature of free incoming,outgoing transfer. "By ""basic public pension"" I assume you mean Social Security, which is pretty much the only quasi-universal pension-like thing in the USA.  If she has any other sort of pension (e.g., from a job) you'd need to get more specific info about that. As for Social Security, as described here: While you are working, your earnings will reduce your benefit amount only until you reach your full retirement age. According to the calculator on that site, if she is 65 now, her full retirement age would be 66, so if she retires after that age her SS benefit won't be reduced due to extra income. As described here, if she has considerable income apart from SS, she may have to pay taxes on her SS income.  This would not reduce her income, but means the benefit of her extra blog income would be reduced.  This page describes how to calculate your ""provisional income"" to determine whether SS benefits will be taxed.  According to that page: If your provisional income is less than $25,000 for single or head-of-household returns, or $32,000 for joint returns, then your Social Security benefits will not be taxed. Based on the numbers you gave, this suggests she would not incur an SS tax.  However, she should probably take a look at the Social Security retirement estimator and other tools on that site, if she hasn't already done so, to get a sense of what sort of income SS will be providing her. I'd suggest that she talk to a retirement planner and/or CPA to get a handle on what her finances would be like.  At the least, she should find someone knowledgeable about Social Security policies and tax issues in the USA.  As you say, you are unfamiliar with the way these matters work in the USA, so your ability to help her make financial decisions is limited." "Such economical system is the corporatism (well, a fascist poorly designed version).  It is basically a system between free-market and communism, but in practice it is usually located on the far right, beyond conservative capitalism.  -  In corporatism, the state is seen like ""an organic body"" and the different social classes of citizens and state organizations, as the organs of such body.  It is an planned economy but not egalitarian nor distributional (unlike socialism and communism), also inspired by Marxism.  -  In theory this system should serve to create an equitable and just society, such as socialism and communism, but also libertarian.  And yet it has never been used as originally intended. This variant that has been applied is called ""fascist corporatism"".  In theory there are many more models that could work, and some aren't authoritarian, but none has been applied.  -  As a curiosity, the book ""beyond the brave new world"" shows an authoritarian corporatist system taken to the extreme." You need a find a financial planner that will create a plan for you for a fixed fee. They will help you determine the best course of action taking into account the pension, the 403B, and any other sources of income you have, or will have. They will know how to address the risk that you have that that particular pension.  They will help you determine how to invest your money to produce the type of retirement you want, while making sure you are likely to not outlive your portfolio. In the UK, recent changes to pension taxation mean that from April 2011, people earning between £150,000 and £180,000 total and making large pension contributions (>£50,000 or so) will pay a marginal tax rate on additional salary of >100%. This is because pension contributions normally attract tax relief at the highest marginal rate - i.e. 40% if the gross salary is above about £40,000, and 50% for salaries above £150,000. But after April 2011, the rate of relief will be tapered down for gross salaries above £150,000, reaching 20% for a gross salary of £180,000. So for example if you earn £175,000 and make a contribution of £50,000, then an additional £1,000 in salary will incur £500 of direct tax, and also lead to a 1% reduction in tax relief (from 25% to 24%), costing another £500. Once you factor in National Insurance of another 1% or so, the net effect of the pay rise is negative. There should be.  The CPPIB (Canadian Pension Plan Investment Board) is one of the most well-funded pension plans in the world. Your question is also their #1 FAQ. Unlike many other countries, the measures were taken long ago, in that the fund was set up to be sustaining from investments and contributions; rather than just contributions. That said, the amount that CPP pays is not very much.  The maximum benefit is about $11,000 per year, and not many people I know can live on that little.  So you really should be trying to do something to augment that, if you are able. This is basically a math problem. It depends on the pension benefits, the lump sum, and the chance that the company doesn't honor its pension plan. If you're willing to share the first 2 and the company name, it's possible to roughly figure out the odds of the third if your company has bonds or CDS. Maybe some bored analyst would do it for you here, or you could probably hire a financial advisor for an hour or 2 to figure it out. Massively over-promising pensions are a problem in numerous states.  California has done this so catastrophically that they could easily be seen as a qualitatively different than others (not just a bit worse but so systemically damaging that it is a different type of problem than most states face). "Are you not allowed the y5 option?   I'm no guru, but one thing that sticks out to me in that plan is the vesting period of 5yrs as opposed to 10, so the money is ""yours"" in half the time....so if after 5yrs, you find a better gig, you can roll those benefits into another account and manage them on your own (or just leave and draw on them when you are eligible)  Then again, knowing that many municipalities are in shit shape due to their pension benefit liabilities, they may be pushing to the longer vesting period to a) encourage you to stay employed there and/or b) allow them to keep the money should you leave before that 10yr period  Like I said, though- I'm def no guru, and that is only one aspect of these plans.  I'd personally reach out to a financial planner so they can game it all out for you and equip you with the info to make the best choice" This is hyperbole that makes assumptions about engineering details that are easily addressed: Use a system analogous to marginal tax rates to solve this problem.  Have 0-tax cutoff values a few times larger than expected pension/retirement fund savings values for individuals. That's not how pension funds work. Individuals don't have their own account. They have a promise for a guaranteed amount of income. The money gets managed all together in one giant pool by professional investors. And these are the investors that the article is talking about.  They're not a bunch of billionaires refusing to invest idle cash. They're often bureaucrats in charge of sovereign wealth funds that are desperately trying to earn enough interest to meet their obligations. Taxing them more isn't going to help anything. There's a bit of working backwards that's required.   This is a summary of a spreadsheet I wrote which helps to get to the answer. What you see here is that at age 25, one might have saved about a half year's salary, assuming they worked 5 years. The numbers grow exponentially to at 65, about 15 years salary saved. This will allow a withdrawal of about 60% final income each year using the 4% guideline. More will come from Social Security in the States to get closer to 100%. The sheet start with assumptions, a 10% per year rate of saving, and an 8% annual return. Salary is assumed to rise 3% per year. One can choose their age, enter their current numbers and their own assumptions. I had to include some numbers and at the time, 8% seemed reasonable. Not so sure today. What I do like is the concept of viewing savings in terms of 'years salary' as this leads to replacement rate. Will $1M be enough for you? Only you can answer that. But the goal of 80-100% replacement income is reasonable and this sheet can be used to understand the goals along the way. (note, the uploaded sheet had 15% saving rate, not the 10 I thought. I used 15 to show a 10% saving along with a 5% match to one's 401(k). Those interested are welcome to enter their own numbers. The one objection I've seen is the increase to salary. Increases tend to be higher in the first 20 than the second, or so I'm told.) Public sector and private industry retirement plans, taxation and estate planning would be the most substantial differences between the two countries. The concepts for accumulating wealth are the same, and if you are doing anything particularly lucrative with an above average amount of risk, the aforementioned differences are not very relevant, for a twenty something. "Also within Germany the tax offices usually determine which tax office is responsible for you by asking where you were more than 180 days of the year (if e.g. you have a second flat where you work). That's a default value, though: in my experience you can ask to be handled by another tax office. E.g. I hand my tax declaration to my ""home"" tax office (where also my freelancing adress is), even though my day-job is 300 km away.  So if you work mostly from Poland and just visit the German customer a few times, you are fine anyways. Difficulties start if you move to Germany to do the work at your customer's place. I'm going to assume that this is the situation as otherwise I don't think the question would have come up.  Close by the link you provided is a kind of FAQ on this EU regulation About the question of permanent vs. temporary they say: The temporary nature of the service is assessed on a case-by-case basis.  Here's my German-Italian experience with this. Background: I had a work contract plus contracts for services and I moved for a while to Italy. Taxes and social insurance on the Italian contracts had to be paid to Italy. Including tax on the contract for services. Due to the German-Italian tax treaty, there is no double taxation. Same for Poland: this is part of EU contracts. By the way: The temporary time frame for Italy seemed to be 3 months, then I had to provide an Italian residence etc. and was registered in the Italian health care etc. system. Due to the German-Italian tax treaty, there is no double taxation. Same for Poland: this is part of EU contracts. Besides that, the German tax office nevertheless decided that my ""primary center of life"" stayed in Germany. So everything but the stuff related to the Italian contracts (which would probably have counted as normal work contracts in Germany, though they is no exact equivalent to those contract types) was handled by the German tax office. I think this is the relevant part for your question (or: argumentation with the German tax office) of temporary vs. permanent residence.  Here are some points they asked: There is one point you absolutely need to know about the German social insurance law: Scheinselbständigkeit (pretended self-employment). Scheinselbständigkeit means contracts that claim to be service contracts with a self-employed provider who is doing the work in a way that is typical for employees. This law closes a loophole so employer + employee cannot avoid paying income tax and social insurance fees (pension  contributions and unemployment insurance on both sides - health insurance would have to be paid in full by the self-employed instead of partially by the employer. Employer also avoids accident insurance, and several regulations from labour law are avoided as well). Legally, this is a form of black labour which means that the employer commits a criminal offense and is liable basically for all those fees.  There is a list of criteria that count towards Scheinselbständigkeit. Particularly relevant for you could be" In the US, pension benefits promised by employers are tightly regulated by a law called ERISA. One of the requirements is that money be deposited in a trust that is out of the reach of the employer and the employer's creditors, so even if the employer falls on hard times or goes bankrupt, the money to pay the pensions is still there. In addition, the benefits are guaranteed by the federal government through the Pension Benefit Guaranty Corporation (usually called the PBGC). Relative to most investments, pensions are a safe bet.