Is it possible to withdraw the funded part of the pension before retirement or immediately after retirement?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

What is the current pension system and is it possible to get your savings ahead of schedule - questions at the forefront of every citizen approaching retirement age. Recently, in connection with the emergence of non-state funds, there are even more questions. Let's see if it is possible to withdraw the funded part of the pension ahead of schedule? What can citizens expect today?

How is the future pension formed?

The system for dividing the total amount of pension contributions has been in force in Russia since 2002 and is relevant for citizens born after 1967 inclusive. According to the reform, all pension contributions made by the employer are distributed to the insurance and funded parts of the employee's future pension.

Deductions are made in the amount of twenty-two percent of the wage fund in the following ratio:

• Six percent goes to the solidarity part to cover the costs associated with the provision of pensions to citizens who have already retired. This percentage of deductions does not affect the status of the employee's individual account in any way.
• Ten percent are transferred to the insurance part, are taken into account when calculating the future pension, but are actually spent as a joint part.
• Six percent goes to the employee's individual savings account and in no way affects the payment of maintenance to current pensioners.

Compulsory contributions of citizens of the older generation (born before 1967) are distributed in a different way. This age category does not fall under the mixed pension system, therefore, it does not have separate insurance savings. Their pension contributions are distributed in this order:

• six percent is transferred to the account of the solidary part of the fund;
• sixteen percent goes to the insurance part of the employee's pension.

Reforming the pension system

After the pension reform carried out in 2015, the procedure for the formation of future pensions has also changed. In particular, the state abandoned the funded system, designating the insurance part as a priority. At the same time, citizens from among the participants in the 2002 reform were given a choice in terms of the distribution of pension contributions, namely: to refuse or to keep the funded pension. Accordingly, in case of refusal, the employee’s periodic payments in the amount of sixteen percentare directed only to the insurance part of the pension. Previously made savings are kept by the future pensioner and are subject to investment in order to receive a certain percentage of profit from participation in financial transactions.

While maintaining the funded system, part of pension contributions, as before, is subject to transfer to the account of personal pension savings of citizens in the same amount, which entails a decrease in the volume of the insurance part. In addition, unlike insurance premiums, the employee's funded contributions are not indexed by the state. Before turning to the question of whether it is possible to withdraw the funded part of the pension ahead of schedule, let's consider the advantages and disadvantages of the modern system.

Pros and cons of the funded system

Since the introduction of a new procedure for the formation of a future pension, Russians have been given the opportunity to choose an organization in which the accumulated funds will be stored: a state fund or non-state companies.

In turn, the fund management company uses the funds accumulated by citizens to invest in the financial market in order to make a profit. It is difficult to predict how profitable such operations will be. Much depends on the experience of the company and the ability of the employee to make the right choice in favor of a leader among financial market participants. In case of failure, the company guarantees the return of the initial amount of deductions made by the employer, while, of course, we are not talking about any additional income.goes. Therefore, the question: "Can I withdraw the funded part of the pension?", Interested in an increasing number of citizens.

Unlike insurance savings, funds held in non-state pension funds are still accounted for in cash, not in points.

The mechanism for determining a funded pension is much easier to understand for an ordinary citizen, and besides, the legislation allows you to transfer the funds accumulated over the years of work by inheritance.

What is included in the funded portion?

Depending on the employee's participation in special pension programs, his savings for the period of seniority are made up of the following deductions:

• periodic deductions of six percent, replenishing the funded part;
• payments made by an employer under corporate pension schemes;
• insurance contributions made by the employer and the state as part of co-financing;
• family capital funds, directed at the request of a woman to form a future pension;
• part of the profit generated by the management company as a result of investing in funded pension contributions.

The amount is rather big, especially for those who have a good official salary. In many ways, therefore, the question of whether it is possible to withdraw the funded part of the pension is becoming more and more relevant. This issue is regulated by law.

Eligibility to receive accumulated funds

The funds accumulated during the length of service are payable to persons who have reached the general retirement age, including those who retire early, regardless of the purpose of other payments (for example, disability pensions, monthly payments to citizens who have lost their breadwinners, and other types of maintenance).

The emergence of the right to receive funds accumulated by a citizen is associated with the following condition: the amount of a pensioner's savings must exceed five percent of the amount of the insurance pension. This takes into account the size of the fixed payment and the amount of funds available in the account.

You can withdraw money from the funded part of the pension in the form of a lump-sum payment if the available amount is less than the amount established by law.

Eligibility for early security

As a general rule, it is not possible to withdraw the funded part of the pension ahead of schedule. The right to receive funds arises from the moment a citizen reaches the age of retirement. Age is a general criterion for the appointment of both types of pensions for citizens.

Since the retirement age varies depending on working conditions and the type of work activity, the following categories of employees have the right to early assignment of a funded pension:

• teachers (teachers) in educational institutions;
• medical workers;
• citizens who have earned seniority in the Far North;
• railwaymen;
• geologists;
• flight test personnel.

A detailed list of categories of employees eligible for early retirement on a well-deserved rest is determined by federal law.

Who has the right to withdraw the funded part of the pension in the event of the death of a person?

The insured person who has savings has the right to make a testamentary disposition in favor of the successors he has designated.

Thus, in the event of an untimely death of a citizen, the appointed heirs acquire the right to withdraw the funded part of the pension stored on the individual account of the testator.

If during the life of the insured person no orders were left, the right to inherit the available funds passes to the heirs by law. The priority successors in accordance with the current legislation include: the spouse, parents and children of the testator. If there are none, successors of the following lines are called to inherit.

At the same time, the funds accumulated by the deceased citizen are subject to payment to the heirs in the following cases:

• before the appointment of a pension if there are appropriate deductions on the account of the deceased;
• after the appointment of urgent pension payments in the amount of the balance of unpaid funds;
• after calculation until the payment of the assigned amounts within four months from the date of death.

Pay attention! In case of appointmentthe insured person receives an indefinite pension during his lifetime, the accumulated funds after his death are not paid to the heirs.

Early payments in the event of an insured event

Is it possible to withdraw the funded part of the pension before the legal age? In some cases, the legislation allows for the possibility of a lump-sum payment of funded pension funds. The cases when you can withdraw the funded part of the pension are regulated by law. The right to apply for early receipt of funds is:

• disabled people of the first, second and third groups, recognized as disabled, as well as citizens who have lost their breadwinners;
• citizens who, upon reaching the retirement age, do not have the necessary length of service or have a low coefficient, which does not allow them to accrue an old-age pension;
• recipients of state benefits who do not have sufficient length of service or the required coefficient for calculating an old-age pension;
• persons whose accumulated funds are insignificant (less than five percent of the amount of the insurance pension, taking into account the fixed payment and the calculated funded pension).

Urgent retirement benefits

If there is enough capital to establish a funded pension, it is possible to accrue both urgent and indefinite payments to a pensioner from accumulated pension contributions.

Accordingly, an indefinite pension is assigned for life, while urgent paymentsset for several years. The pensioner has the right to independently choose the period of such payments. However, this period cannot be less than ten years. Citizens who have reached retirement age, including those who retire early, have the right to count on urgent payments, provided that deductions to the funded part were made through additional contributions from:

• additional employer deductions;
• voluntary contributions from citizens as part of co-financing;
• maternity capital funds.

Conclusion

Is it possible to withdraw the funded part of the pension ahead of schedule? Based on the requirements of the legislation in force today, the right to use these funds arises no earlier than a citizen reaches the established age. The only exception is the premature death of a person who has not reached the age of retirement. True, in this case, only his successors have the right to use the funds.