39.1 Accounting policy

In connection with the accepted accounting and the fact that PZU Group companies have not separated assets of defined benefit plans, the carrying amount of provisions for defined benefit plans is equal to the carrying amount of their corresponding liabilities.

39.1.1 Defined contribution plans

The costs of contributions incurred by an employer, which are statutory burdens imposed on employee salaries, are charged to the profit and loss account in the period in which they are incurred. In Poland, they include parts of contributions for pension and disability insurance and all the contributions for accident insurance, Labor Fund, Guaranteed Employee Benefit Fund and a charge to the Company Social Benefit Fund.

39.1.2 Defined benefit plans

Pursuant to the Labor Code Act of 26 June 1974 (Journal of Laws of 2018, Item 108, as amended, “Labor Code”) employees of the PZU Group companies that are domiciled in Poland are entitled to a retirement severance pay (in the amount equal to one month’s salary at the time of retirement) or post-mortem benefits (depending on the tenure in PZU Group companies, in the amount equal to salary for 1-6 months).

The costs of defined benefit plans estimated using actuarial methods are recognized on an accrual basis by applying the forecast specific entitlements method.

Actuarial gains and losses are recognized in full in the period in which they occurred, in the line item “Actuarial gains and losses related to provisions for employee benefits” in other comprehensive income. Additional information is presented in item 37.2.1.

39.1.3 Costs of holiday leaves 

Employees have the right to holiday leaves, which are regulated by labor law (in Poland by the Labor Code). The costs of holiday leaves is recognized on the accrual basis using the liability method. The amount of the liability for holiday leaves is determined using the liability method, based on the difference between the actual amount of holidays used by employees and the amount that would have been used if the holidays had been taken pro rata to the lapse of time in the period when the employees are entitled to the leaves in accordance with the applicable regulations.