To remain in old age without a livelihood is worse than you can imagine. In order to create guarantees of material security for each socially vulnerable member of society, compulsory pension insurance was introduced. The pension payment is formed of 3 parts, the size of each of which can be influenced by a person. The insurance part and the fixed payment depend on the length of service and the points formed on the account. And the funded part, to a greater extent, depends on the financial literacy and foresight of the person himself.
What it is
A person at a certain point in time loses the ability to earn a living. For most, this happens due to old age.
Someone runs the risk of becoming disabled and, despite their young age, will also not be able to support themselves.
These phenomena are massive and widespread, so they could not remain unnoticed by the state authorities.
Mandatory pension insurance (OPS) is a set of measures and measures developed by the state and aimed at compensating people for their previous earnings.
Such measures are legal in nature – they are fixed at the highest legislative level, economic in nature – are associated with the redistribution of monetary funds, and organizational nature – regulated and controlled by the state apparatus.
What is it for
The most vulnerable person is not the one who does not have money, but who does not have the opportunity to earn it.
The state correctly judged that the elderly, the disabled and the disabled, who have lost their breadwinner, are completely deprived of the opportunity to work. Therefore, mandatory pension insurance is introduced for everyone living in Russia.
For each officially employed employee, the employer transfers part of the earnings to the reserve fund. And when the retirement age comes up, a person will lose the obligation to pay, but receive the right to receive.
A little about pension reform
Pension insurance takes place in a circle: while the younger generation is working and making contributions, the current pensioners receive their due payments.
But they get it for the reason that they themselves used to work and deducted contributions. It turns out that today’s retirees receive payments at the expense of their current employees. And in order for the size of pensions to be decent, the ratio “the number of pensioners – the number of employees” should be approximately equal.
The 2018 reform raised the retirement age to 63 for women and 65 for men. The goal of the reform is to equalize the ratio so that there are no 3 non-working pensioners for every 1 working citizen. After all, the number of people retiring does not change, but the number of officially employed workers is decreasing every year.
So, despite the flurry of criticism, the reform has a rational grain. She, indeed, can influence the material condition of future retirees in the best way. The state will be able to index it every year, and not by 100 rubles, but by about 1,000.
Features and functions
Mandatory pension insurance has traditional categories and features, but there are also some peculiarities.
The insured are individuals, legal entities and individual entrepreneurs who make contributions.
An insured person is an employee who will receive a pension in the future.
The main insurer is the Russian Pension Fund. If you compare the size of its budget with the budgets of other extrabudgetary funds, it will be obvious that it is much more significant.
The PFR budget consists of:
- employers’ contributions;
- voluntary contributions;
- budget transfers;
- investment savings;
- money of people who have received the right to the urgency of the pension;
- spare funds for funded pension.
Budget money goes to:
- issuance of pensions;
- social payments;
- maternal capital;
- other goals.
From the budget of the Pension Fund, money goes not only to the issuance of old-age pensions, but also to the issuance of pensions for disability and in connection with the loss of a breadwinner.
To better understand the essence of pension insurance, you need to determine what functions it performs. If you carefully follow the “spirit” of the Federal Law “On Compulsory Pension Insurance” No. 167, it becomes clear that the functions of the GPI are as follows:
- Social is the fundamental function of pension insurance, which most clearly reflects its purpose. It is about protecting each member of society, about creating a stable standard of living in the event of disability.
- A stimulating one is an unambiguous hint that you should rely on the state, but do not make a mistake yourself. The stimulating function is designed to form an understanding that the size of your future pension can be increased, because its size is influenced by the length of service and insurance premiums paid during the period of work. And these two indicators are under the control of the person himself.
Mandatory pension consists of 3 parts:
- Fixed payout.
Let us consider in more detail how the formation and accumulation of a future pension occurs.
- The employer must deduct 22% of the employee’s salary to the FIU.
- This 22% is divided into two parts: 6% (general part) and 16% (personal part).
- The general or, as it is called, the joint part in the amount of 6% goes to the general account. This money will be spent now and will never be returned to the employee in the form of a pension. Solidarity funds are spent on the issuance of fixed payments, the issuance of social benefits for the burial of deceased pensioners and other running costs. 6% is needed so that the Pension Fund can perform its functions here and now.
- Personal part in the amount of 16% goes to the employee’s own account. It is also divided into two parts: insurance (10%) and funded (6%).
- The insurance part in the amount of 10% is kept with the FIU. This does not mean that the money is simply frozen in a personal account: the fund spends it on issuing pensions to current pensioners. We can say that the Pension Fund borrows these funds and then returns them in a larger amount. The increase occurs because it is the insurance part that is subject to indexation.
- 6% of the funded part is not spent in any way and is not subject to indexation. A person can dispose of these percentages at their own discretion. How: firstly, this 6% can be transferred to the insurance part. It turns out that it will be 16% and will be indexed in its entirety. Secondly, they can be left with the FIU. The fund is engaged in investing funded parts in reliable assets in order to increase the size of the upcoming pension. Thirdly, the funded part can be transferred to a non-state pension fund or an insurance company. Such insurers are engaged in investing the savings of citizens in various projects. But, you need to understand that, unlike the Pension Fund, investment by private insurers may not be profitable.
Fixed payment is an indispensable part of the pension, which is added to the insurance part.
A person of retirement age who has worked for at least 10 years and has accumulated the required number of retirement points will be able to get it (we will talk about them later).
In 2019, the fixed payment is about 5,300 rubles. Its size is indexed every year.
Some citizens receive a higher payment, for example, those who have reached the age of 80, have dependents, worked in the far north, etc.
How to get
The funds that form the future pension accrual are stored in the personal account of the insured person, therefore, such an account must be opened. Each personal account has an individual number. The number is reflected in the certificate – SNILS.
It is very easy to get SNILS. You need to come to the PFR office with a passport and fill out a questionnaire. The document will be ready in about a week.
Minors (from 14 to 18 years old) can obtain a certificate on their own with a passport.
For children under 14 years old, SNILS will be prepared and given out in the presence of their parents.
When a person gets a job and it turns out that he is not registered in the pension insurance system, it is up to the HR officer to fix it. A specialist from the staff must send data about the employee to the PRF, which will register and issue a certificate.
Each insured person in the GPT system may require the provision of an extract from his account.
About the size of pensions
Recent changes in the part of pensions have introduced a new point system. From now on, the size of the pension is determined based on the value of the individual pension coefficient (IPC) or, more simply, the accumulated pension points. What it is and how to become an excellent student of an OPS, we will figure it out.
It is not easy to define an IPC, since it is a relative value that depends on several factors:
- The number of years worked, i.e. experience. But only those years for which payments were made to the Pension Fund are taken into account. In 2019, you need to have a minimum 10-year seniority to retire. By 2025, this figure should rise to fifteen years. The seniority includes the time when a man served, and a woman was on maternity leave, when representatives of both sexes were engaged in significant social activities and other cases.
- The size of wages. We are talking only about the white salary, from which 22% were counted.
- All kinds of preferential conditions, for example, if the work proceeded in dangerous conditions, in the far north.
- The moment of applying for a pension. That is, the person has already reached retirement age, but does not apply to the fund for payment. For example, he makes good money so. So, for this missed period, points will be awarded in larger quantities.
Today, in order to qualify for a pension payment, you must have at least 16.2 points. By 2025, it will already be necessary to grow to 30 points.
There are situations when the retirement age has already burst out, and the experience and points are a little short. In this case, a person receives the right to receive security not upon reaching the specified age, but upon reaching the minimum requirements for length of service and the number of points.
And there are citizens who have never worked in their lives, or worked unofficially, without appropriate deductions to the FIU. The state will also not leave them without minimal assistance. Such a person can count on a social pension.
There are two important rules to keep in mind when it comes to social benefits. Eligibility comes 5 years later than usual (under the new rules, 65 for women and 70 for men). And the size is small, about 5 thousand rubles. But Russian legislation determines that if the pension of a non-working pensioner is less than the subsistence minimum, an additional payment is due. It turns out that the social pension in any case will not be less than the subsistence level.
It turns out that the size of the fixed payment and the insurance pension depends entirely on the efforts of the person. The more years he will work and the more the employer will deduct for him to the fund, the more significant the future pension payment will be.
However, you can influence the size of the pension in one more way: to competently dispose of your funded part.
As agreed, the funded part can be transferred to the insurance part, invested in the investment program proposed by the PFR, or transferred to a non-state fund / insurance company.
There can be no universal advice on how to win. The person decides for himself what to do with the savings. The only recommendation: evaluate all the risks and choose a reliable insurer. Especially when it comes to private companies to which you give your savings.
The monthly payment in the form of a pension reflects a person’s life path, the number of years worked by him, working conditions, the amount of salary, etc. Or – a terrible event occurred in the form of disability or loss of a breadwinner.
In any case, the pension payment is the guarantor of a dignified existence.
The state provides a person with the opportunity to influence the size of future pension payments in different ways. It seems that while we are young, there is no need to worry about this. But this is not so: the task of every conscious person is to take care of their future and prepare a worthy airfield for old age.