The paper presents the scope of operations and the functioning of pension funds in the Polish capital market. The author discusses the activities of open pension funds (2nd pillar of the reformed pension system) and company pension plans (3rd pillar). Barriers to growth of company schemes in Poland are described, along with their benefits from the point of view of the employee (prospective pensioner). Finally, the paper discusses the impact which the advent of pension funds had on the Polish capital market.