In connection with the pension reform implemented in the Russian Federation, the calculation of the insurance pension has changed. Different concepts are introduced, including an individual pension coefficient. What does this figure mean, how is it calculated or assigned? Under the IPC refers to a certain number of pension points accrued to each citizen at work with official employment. The increase in the coefficient depends on the following factors:
- Duration of work experience.
- Amounts of contributions to the Pension Fund.
In order to calculate the IPC, a special formula is used.
Coefficient value
All Russians must be insured under the mandatory pension insurance program. Due to this, they have the right to receive payments upon reaching old age or the appearance of grounds established by applicable law. In the event of a citizen retiring at an old age pension, an insurance pension shall be assigned, consisting of the following parts:
- Fixed. Size is approved annually in February.
- Calculated through the number of retirement points, the value of which also varies from year to year by the relevant decree of the Government.
As of 2018, the fixed part of the insurance payment is 4,982.90 rubles, and one pension point is 81.49 rubles. If the first part is the same for all pensioners, the second is different and depends on which individual retirement coefficient is determined for a person.
Legislation
Currently, the situation in pension legislation is not stable. A number of pension reforms are underway, one of which is related to IPC. Pension points introduced since 2015. Until that moment, the main act that regulated this issue was the Law on Labor Pensions No. 173-FZ. In accordance with it, citizens received the right to apply for a pension when they reach a certain age.
The pension consisted of two parts: funded and insurance. Later, these parts became two different types of pensions and were regulated by separate laws:
- “On Insurance Pension” No. 400-ФЗ.
- “On funded pension” No. 424-ФЗ.
How to find out an individual retirement rate?
Pension calculation can be done using the online calculator. This method is the simplest. Such a program is on the official virtual resource of the FIU, as well as on other thematic sites. To use the calculator, you need to enter the necessary data. However, it should be understood that such a calculation will show only a very approximate value.
A more reliable way is the independent use of a special formula, which is given in law No. 400-FZ. It looks like this:
IPC = (IPKS + IPKN) * K, where
IPC - individual pension coefficient (the calculation of which is carried out according to this formula);
IPKS - points that were awarded for labor activities until 2015;
IPKN - points accrued after the start of the reform;
K - increasing coefficient (used for old-age insurance pension, as well as for loss of breadwinner).
How are retirement points counted by year?
Pension points are awarded from the first working day on official employment. This takes into account the fact that the employee transfers part of the contributions to the funded pension or not. If a contract is concluded with an NPF or a state management company, then less pension points will be awarded than in the case when deductions are fully transferred to an insurance pension. The general formula is as follows:
PBG = CER / MOH * 10, where
PBG are pension points for the past year;
CER - the amount of pension contributions;
MOH - the amount of deductions from the maximum wage with which the tax is levied (this value changes every year).
Pension calculation
The following example will help to better understand the PKI (individual retirement rate). The calculation of the pension is carried out in respect of a citizen whose salary was 40,000 rubles. Income per year was obtained in the amount of 480,000 rubles. (40,000 * 12).
If the funded pension is not formed, the following method is applied. It will also help to calculate an individual retirement rate, as well as a future pension:
- The size of annual contributions to the FIU will amount to 76.8 thousand rubles. (480,000 * 16%).
- The value of the MOH in different years is as follows:
- 59.25 thousand rubles. in 2015;
- 66.33 thousand rubles in 2016;
- 73 thousand rubles in 2017;
- 163.36 thousand rubles in 2018.
- In 2018, the calculation will show the following values: 163,360 * 12 * 16% = 313,651.20 rubles.
- Then the PBG will be equal to 76 800/163 360 * 10 = 4.7
If citizens postponed part of the deductions for the funded pension, the calculation is carried out in the same way, except that instead of 16% they indicate 10%.
In addition, there are non-insurance periods that are also taken into account when calculating pensions. These include service in the armed forces of the Russian Federation, a woman’s vacation while caring for a small child, and being unemployed. During these periods, an individual pension coefficient may be calculated, which will be between 1.5 and 5.4 per year. This data is conveniently displayed in the following table:
| Uninsured periods | The number of points for 1 year |
| Military service | 1,8 |
| Care for the 1st child up to one and a half years | 1,8 |
| Caring for a disabled child | 1,8 |
| 2nd child care | 3,6 |
| Group 1 disabled person care | 1,8 |
| Caring for a third, fourth and next child | 5,4 |
| Care for twins, triplets, etc. | The indicator is summarized |
Calculation of pensions for different periods
Considering that the legislation has been amended several times, the pension is considered differently in the following periods:
- Until 2002
- From 2002 to 2014.
- Since 2015
Until 2002, in a centralized manner, pension contributions were not recorded. Therefore, to confirm the experience, citizens had to receive relevant information from the archives. An individual pension coefficient is calculated from the total amount earned before 2002, which is converted into points.
Features of the calculation for the period from 2002 to 2014 are that it is affected only by the amount of deductions to the individual personal account. Other parameters, for example, experience, do not matter. Calculation is carried out by dividing the total amount by the period of survival (in months).
Maximum coefficient when assigning a pension payment
The size of future payments depends on the length of service, as well as the size of official earnings. That is, the higher the salary, the more pension points will be awarded. At the same time, the law introduced a limited number of points that can be obtained in 1 year. Due to the fact that the system with pension points is valid for several years, a different maximum individual pension coefficient has been established. Its value increases in the period from 2015 to 2021. In the following table, you can see how many pension points can be earned during the introduction of the new system. Moreover, different values are obtained depending on whether the employee defers part of the contributions to the funded pension or not.
| Year | Insurance pension only | Insurance + funded pension |
| 2015 year | 7.39 bp | 4.62 b. |
| 2016 year | 7.83 b. | 4.89 b. |
| 2017 year | 8.26 b. | 5.16 b. |
| 2018 year | 8.7 bp | 5.43 b. |
| 2019 year | 9.13 b. | 5.71 b. |
| 2020 | 9.57 b. | 5.98 b. |
| 2021 | 10 b | 6.25 bp |
However, later, the values of individual pension coefficients for an insurance or insurance and funded pension began to be considered the same until 2020. This decision was made due to the fact that a temporary moratorium was imposed on the funded pension. Therefore, all contributions are still fully transferred to the insurance part.
Minimum performance
Along with the introduction of IPC, other indicators are undergoing reform.In this regard, the right to receive an insurance type of pension upon reaching the age prescribed by law arises in the presence of a minimum length of service, as well as the total number of pension points earned for a certain period. These indicators have different values in the period from 2015 to 2025.
Minimum length of service required is as follows:
- In 2015 - 6 years.
- In 2016 - 7 years.
- In 2017 - 8 years.
- In 2018 - 9 years.
- In 2019 - 10 years.
- In 2020 - 11 years.
- In 2021 - 12 years.
- In 2022 - 13 years.
- In 2023 - 14 years.
- In 2024 - 15 years.
The minimum number of PKIs for retirement after reaching a certain age should be as follows:
- In 2015 - 6.6.
- In 2016 - 9.
- In 2017 - 11.4.
- In 2018, 13.8.
- In 2019 - 16.2.
- In 2020 - 18.6.
- In 2021 - 21.
- In 2022, it was 23.4.
- In 2023 - 25.8.
- In 2024 - 28.2.
- In 2025 - 30.
If you apply for a pension later than the deadline
As can be seen from the above information, the amount of future benefits is directly related to the number of pension points. In addition, the pensioner has the opportunity to increase his pension by applying to the Pension Fund later than the period established by law. For each year, the amount of payment is recalculated based on the increasing coefficient.
In the following table you can see what coefficient is applied when retiring later than the appointed period from 1 year to 10 years under standard conditions, as well as if there is the possibility of early retirement.
| Deferral, years | Coefficient | |
| Standard Retirement Conditions | ||
| 1 g | 1,07 | 1,046 |
| 2 g | 1,5 | 1,1 |
| 3 g | 1,24 | 1,16 |
| 4 g | 1,34 | 1,22 |
| 5 years | 1,45 | 1,29 |
| 6 years | 1,59 | 1,37 |
| 7 years | 1,74 | 1,45 |
| 8 years | 1,9 | 1,52 |
| 9 years | 2,09 | 1,6 |
| 10 years | 2,32 | 1,68 |
How much is 1 point?
The value of the score changes every year and depends on the inflation indicators that occurred in the previous year. According to the Law on Insurance Pensions No. 400-ФЗ, this indicator is expressed in rubles. Each year, the corresponding value is established by a government decree.
In January, the inflation rate for the previous year is calculated. Therefore, an increase in the retirement point occurs in February. But also cases are not excluded when the cost of an individual pension coefficient can be increased by a level exceeding inflation. For example, in 2018 its value increased by 3.7% and amounted to 81.49 rubles, although the growth in prices for basic products was fixed at around 2.5%.
Conclusion
Currently, many citizens work informally or semi-officially without an employment contract. Thus, the employer does not transfer funds to the FIU at all, or transfers amounts that do not reflect the employee’s real wages. This leads to the fact that a person does not count work experience and pension points are not assigned. As a result, upon retirement, he will not be able to rely on insurance pension benefits. The only thing that remains is to wait for the appointment of a social pension (5 years after reaching the appropriate age).
At the same time, officially employed citizens also do not have confidence in the future. The new system is just being introduced, and in connection with this there are many questions that can only be answered by time. But today it can be said that if there are no changes in the law, then with official work with low earnings, one cannot count on a normal pension in old age. Such people will be awarded only a small number of pension points, which will lead to the fact that citizens will be assigned a minimum pension with the possibility of corresponding surcharges in the region.