What is the funded and insurance part of the pension? The term for the transfer of the funded part of the pension. Which part of the pension is insurance and which is funded

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

Thinking about your future and planning your own old age is a completely rational approach to life. And in Western countries, this desire of citizens has been fully supported by the current legislation for many decades. In Russia, the pension reform has been in effect for quite a long time, a little over a decade. Despite this, many working citizens still cannot understand what the funded and insurance part of a pension is, and, consequently, what amount of security awaits them in old age. In order to understand this issue, you need to read the following information below.

Prerequisites for changing the pension system

Until 2002, the calculation of pensions for citizens took place according to the "principle of solidarity", which has been used since the days of the USSR. Abroad, such a distribution system was called“pay as you go”, which translated into Russian means “pay as you go”. The essence of this system was that the pension contributions of all working citizens of the country were distributed among people who are currently on a well-deserved rest. This approach was quite logical and justified, but only until the moment when the pension burden began to increase rapidly. Previously, the minimum amount of provision for one pensioner was assigned to 2 - 2.5 working people, but with the deterioration of the demographic situation in the country, this figure has rapidly decreased. And, according to experts, already in 2020 this ratio will be 1:1.

In addition, contributions to the insurance part of the pension, which are deducted by working citizens in the Pension Fund, for the state perform the function of investing in the modernization of the country's economy. By changing the pension legislation, the state not only ensures the future of its people, but also receives a significant injection of capital into its own development.

The essence of the reform and the formation of labor pensions

From 2002, 4 laws came into force regulating the balanced work of the pension system. However, it is impossible to talk about cardinal changes, in accordance with the content of these documents, since they are a smooth transition from the distributive system that existed before to the distributive-accumulative one.

Since the entry into force of the new legislation, the formation of a labor pension is carried out in the OPS system (mandatory pension insurance), and it consists of three main parts: insurance, basic and funded. Whatconcerns the size of the pension provision of citizens, it is calculated according to the formula established by federal law.

In general, the reform allowed the citizens of the Russian Federation to independently regulate the amount of pensions, increasing their own savings with the help of private management companies or specialized non-state pension funds.

The main problem of pensioners

Despite the fact that the pension reform in Russia has been in effect for quite a long time, many pensioners and working citizens still have not figured out what the funded and insurance part of a pension is. And, therefore, they cannot properly manage their savings and get a decent profit. That is why, starting to consider the modern pension system, you should study the basic concepts. And only after that, to discuss whether to transfer the funded part of the pension and how to do it?

Pension system 2002-2010

All employers of the federation, in accordance with applicable law, must pay monthly contributions to the PF in the amount of 20% of the salary of each employee. Until the end of 2007, the rate was divided into three parts: 4% was the funded part, 10% was the insurance part, and, accordingly, 6% was the base part. This distribution was not entirely fair to citizens who wanted to increase their income from investments and receive a decent amount of monthly security upon retirement. Since January 2008, amendments to the laws on pensionreform. In accordance with them, the percentage of the insurance part of the pension was reduced by 2 units, which were transferred to the funded item.

As for individual entrepreneurs, in accordance with the law, they are obligated to pay a clearly fixed rate to the PF on a monthly basis. For organizations of any form of ownership using a special simplified taxation system, contributions are provided for the insurance part of the pension in the amount of 10% and 4% for the funded one.

Basic part of pension

The smallest component of the pension is the basic part, which is a strictly fixed amount established by the state as a guarantee obligation to citizens. Initially, since 2002, it was 450 rubles, but every year this amount is indexed to inflation.

It is worth noting that formally the basic part of the pension is financed from monthly contributions that employers deduct in the PF. However, in fact, this amount is not enough for payments, so the federal budget compensates for it. After all, no matter how much the basic insurance part of the pension was received in the current period on the PF accounts, the state must fulfill its obligations to provide for socially unprotected citizens.

This amount of security is assigned to all citizens who have reached retirement age, whose work experience is more than five years. The upwardly adjusted rate is applicable only to persons over 80 years of age, persons with disabilities and citizens with disabled dependents. Basically, thisthe amount combined the previous supplements, compensatory allowances and the minimum pension. Its main function is to provide some basic social guarantee, which is confirmed by its very name.

Since the beginning of 2010, this liability component has disappeared from the pension system, and a fixed part of the insurance pension has taken its place.

Features of the funded pension

The current pension reform in the Russian Federation in recent years involves the use of such a thing as the funded part of the pension, which is formed from 6% of contributions deducted monthly by the employer in the Pension Fund. Its distinguishing feature from other components of pension provision is that these are “live” funds, the increase in the size of which is completely dependent on the employee. After all, the essence of the funded part of the pension lies in the possibility of independent investment of their money. How much it will be possible to increase the accumulated capital depends on the choice of the right investment strategy, in other words, to whom the money will be given to manage.

Citizens began to receive the first payments under this article after the start of the reform on July 1, 2012, when Law No. 360-FZ came into force (popularly this document is better known as the “Payment Law”). Of course, the amounts received by citizens are not very large, as, in principle, the accumulation period, but this was the first step in self-support for old age.

Reformation of the pension system in the Russian Federation continues at the present time. Many laws have already been signed to regulate deductions and the wayformation of the cumulative part. One of the innovations that everyone should know about is that starting from 2015, this component of the pension provision will be formed for all employees “by default”. This means that without submitting an appropriate application for the transfer of funds under the management of other organizations, the funded part is automatically transferred to the insurance.

Who to entrust the management of savings?

Today, there are three options for managing pension savings, and each of them has both its advantages and pitfalls.

So, the first thing you can do with your accumulative pension savings is just leave them in the state Pension Fund. The option is good, it does not require spending time and effort on paperwork, but, having chosen it, one can only hope that by the time you enter your well-deserved rest, inflation will leave at least a small amount for old age. Another significant drawback is the fact that a person does not conclude an individual agreement with the PF and does not have reliable information about the state of his money. The advantage of such management is that the state itself acts as a guarantor of the return of funds.

The second option is much more profitable than the first and boils down to the fact that the funded part of the pension can be transferred to the management of the management company (management company). The return on such an investment, albeit slightly, but exceeds inflation, which guaranteessafety of savings. In this option, as well as the previous one, the state acts as a guarantor, and a person can receive information about the state of his savings account once a year. Despite the economic benefits, financial management of the UK has the highest degree of risk, since these organizations are en titled to invest in profitable instruments.

The third option can be used by people who are not only well versed in what the funded and insurance part of a pension is, but are also ready to refuse the protection of the federation, entrusting their money to the Non-State Pension Fund. From the moment of signing the individual agreement, the funded part of the pension becomes the property of the NPF. Undoubtedly, the return on such an investment will be significantly higher than inflation, but even this cannot guarantee the fulfillment of obligations to return funds.

Before choosing to invest in the funded part of your pension for old age, you should carefully consider all options.

How to transfer the funded part of the pension?

Today, active participants in the pension reform who participate in the funded program are citizens of the Russian Federation born after 1967. It is they who can independently control part of their pension provision and decide where to invest this amount of funds. Many, of course, without creating additional difficulties for themselves, prefer to leave money in the pension fund of the federation and rely only on the state. But those who are not satisfied with the annual incomebelow inflation, they can transfer their savings to a management company or NPF. The term for transferring the funded part of the pension is not limited by time frames, so the application can be submitted at any time. However, the investment agreement will enter into force only from January next year, and the money from the federal pension fund will be transferred to the new management company until March 31. If for some reason the insured person is dissatisfied with the result of cooperation with the management company, then after one year the funded part of the pension can be transferred to another MC.

Cumulative component of today's pension

Loyal conditions for investing savings funds were valid in the Russian Federation only until 2013, after the state at the legislative level took advantage of the inaction of citizens who simply do not engage in their investments. But not everything is as categorical as it seems at first glance. For those who seriously want to deal with the issue of ensuring their own old age, this opportunity is provided in full. That is why the funded part of the pension was extended, more precisely, the period when people can independently choose the rate and the company for investment. Until 2015, any working citizen can apply for the retention of 6% of contributions to the savings fund. If such a document is not submitted, the state has the right to reduce this rate to 2% or even transfer it all into a percentage of the insurance part of the pension. As long as there is a chance to save and successfully invest your accumulative pension funds, you should urgently apply to the Pension Fund.

How do I get pension benefits?

From the moment of entering a well-deserved rest, every citizen who participated in the funded pension program has the right to receive their money. This can be done in three ways, convenient for the pensioner. Firstly, if the amount of savings is insignificant, you can issue a lump sum payment, which will be made within 90 days from the date of submission of the relevant application. Secondly, payments can be stretched for a certain period and systematically receive fixed amounts. Thirdly, if the insurance part of the old-age pension is small, you can divide the accumulated funds for the survival period and receive them as a supplement.

But, as in every rule, there are exceptions in the law on the payment of funded pensions that allow urgent payments. However, they rely only on the category of insured persons who participated in the co-financing of the program and paid contributions on their own. So, for example, it can be women who sent part of the maternity capital to the PF. The term of such payments cannot be less than 10 years.

Inheritance of pension funds

Knowing what the funded and insurance part of a pension is, it is not difficult to guess which of them is more likely to provide a decent old age. But this is not all the benefits of the cumulative component. It may be inherited by the successors of the insured person. To do this, just contact the Criminal Code or the pension fund and submit the appropriate package of documents.

Insurance part of the pension

Considering the essence of the insurance part of the pension, we can say with confidence that thiscomponent is part of the former pension system. After all, all contributions paid by employers for this item of security are placed at the disposal of the state and distributed among current pensioners. Therefore, the insurance part of the old-age pension is only a concept that is conditionally funded.

Even before 2010, this component of pensions was a separate category, and only 8% of monthly employer contributions were deducted for it. But then the percentage of the insurance part of the pension was supplemented by the base one, significantly increasing the insurance fund. This redirection of funds at the disposal of the state made it possible to ensure the payment of pension obligations to all current pensioners without using additional investments.

Basic terminology in pension calculation

Before considering what part of the pension is insurance and what part of the pension will be paid to a person after reaching retirement age, it is necessary to consider several other important concepts. So, the frequently used term "pension capital" should be understood as the amount of funds formed from the monthly contributions of the employee for all years of work experience. The second, but no less important concept that you need to know in order to calculate the size of the insurance part of the pension is “survival period”. The use of this term, at first glance, seems rather rude and disrespectful to pensioners, but without it it is simply impossible to calculate the monthly security. It denotes the estimated lifespan of citizens of respectable age and is equal for everyone, but this does not mean that after the specified time a person will stop receiving a pension. Further amounts are paid from the state budget in the same amount as before.

How to calculate your pension?

To understand what part of the insurance pension will be paid to a citizen after he reaches retirement age, you need to know exactly the amount of pension capital and the statutory survival period. Moreover, the last indicator in 2002 was 12 years and increased by 12 months every year. Thus, in 2013 this figure was 228 months.

The amount of monthly insurance coverage is calculated using one simple mathematical formula: SPV=PC / SD + BCHP, where PC is the estimated pension capital formed from pensioner contributions for years of work experience; SD - the established period for the payment of pensions (survival period); CPP - a fixed part of the insurance pension, which was previously called the basic part.

In order for the amount of pension provision received to correspond to the level of inflation, the insurance part of the labor pension is indexed annually. This approach to preserving the income of citizens allows maintaining the stability of the living conditions of pensioners.

The impact of the reform on the life of military pensioners

In all pension reform laws that have come into force since 2002, the rights of military pensioners to receive a well-deserved pension in full have been infringed. In other words,categories of people who for many years paid their debt to the state, and went on a well-deserved rest, relied only on the insurance part of the military pension. If, after leaving the armed forces, a person continued to work in any other industry and the employer paid contributions to the Pension Fund for him, these amounts simply remained in the federation's budget. Such injustice caused a lot of indignation not only among the military, but also among other categories of budget workers, so the problem had to be resolved quickly.

In the middle of 2008, the situation changed dramatically, as several amendments to the main laws on pension reform came into force. From that moment on, the insurance part of the pension for military pensioners began to be calculated based on the total capital. In other words, if a person finished serving in the armed forces and continued to work in civilian enterprises, all monthly contributions to the PF went to the formation of his settlement capital.

What future pensioners can expect

As statistics show, the pension reform of recent years may have slightly improved the financial well-being of the elderly, but it has not reached its goals. The number of pensioners is quite large, respectively, their insurance part of the pension remains at a minimum. What is it: a mistake of financiers or a detailed plan? It is extremely difficult to answer this question today, and it is pointless. It is too late to look for the cause of the failure, it is necessary to solve the problem that has arisen, and the PF has found a profitable way out of the situation for itself: increase the sizesettlement capital through contributions from the working population.

Of course, the new pension reform is not about increasing interest rates, but only about redirecting funds from the Criminal Code to the power of the federation's budget. For those citizens who did not bother with information about what the funded and insurance part of the pension is, everything will become even easier. They will not need to think about investing funds, but rely only on the state, which will become the guarantor of their pension provision. Thus, the Pension Fund will have much more funds at its disposal to pay off its own obligations, but only time will tell how long such a system can exist.