What is the minimum insurance pension in Russia?

Modern civilization exists according to certain social rules. One of these rules is the state’s care for all its citizens whose work capacity is limited due to illness, emergency situations that have occurred in life, or due to their advanced retirement age. The government of each state sets its own rules for the system of paying pensions to citizens.

What is a pension, how is it calculated, and what is the minimum size of an old-age insurance pension in our country today?

How does the pension system in Russia work?

The system for providing pensions to citizens of the country is the basis of the social policy of a civilized state, which allows all people to live in dignity in the country after completing their professional activities. The minimum insurance pension in Russia today is not very large. The pension system in the construction requires a rigorous, thorough systematic analysis of all the details. When constructing it, it is necessary to take into account numerous factors: the demographic situation in society, the current tax system, inflationary movements, and so on. After a thorough analysis of the legislative branch, it is required to derive a formula for calculating pensions in the country. Now in Russia there is a pension formula updated a couple of years ago, which is based on the duration of labor activity and pension points.

The pension system is a set of rules designed to ensure the constancy and adequacy of pension payments to citizens who have reached the age of pensioners.

The size of employer contributions for their employees today is twenty-two percent of the wages of working citizens. Insurance contributions are divided into two parts:

• The insurance part is 16 percent of the total amount of deductions.
• The cumulative part is six percent.

The first part is accumulated on individual personal accounts of citizens, indexed on an annual basis by the state. From this part, pension payments are made to pensioners today.

Types of Pensions

Today in our country, the following types of pensions are paid:

• Insurance (labor) pension.
• Pension provision by the state.
• Non-state pension.

Retirement pension

Citizens who have lost their ability to work due to the age of retirees can rely on a cash payment from the state called a pension on a regular monthly basis. Also, relatives who are unable to work in the event of the death of their breadwinners have the right to receive a pension.

A retirement pension is available for:

• reaching retirement age;
• disability
• death of the breadwinner.

Who can expect to receive a minimum insurance pension? Women over 55 receive an old-age pension and 60 years for males, if they have at least five years of insurance experience. Disability pension is received by citizens recognized as disabled. A retirement pension in the event of the death of the breadwinner is due to family members of deceased citizens who are unable to work independently and are dependent on breadwinners.

Cost of living above pension

Many citizens of our country who are planning to retire in the near future are interested in the issue of the amount of the minimum old-age insurance pension provided for by the current legislation. There is no officially fixed concept of “minimum pension”.It is believed that the minimum insurance pension is a cash payment paid by the state to pensioners. At the legislative level, the concept of a living wage is fixed, which is different depending on the region (region) of the country. Differences in the cost of living lead to differences in the minimum size of pensions. Here are a few examples of the size of the minimum subsistence level in the regions of the country:

The minimum insurance pension in Moscow in 2018 is 11,816 rubles. This guaranteed state payment should allow pensioners of the capital to live with dignity.

In everyday life, there are cases of the appointment of a minimum old-age pension below the minimum subsistence level, even taking into account accumulated work experience and points earned. For such situations, the law secured the pensioner's right to a social supplement up to the subsistence level.

Conditions for retirement benefits

Social co-payment occurs if the assigned minimum insurance pension is less than the subsistence level. And yet, to receive a supplement, it is required that:

• A citizen of the country should not work or engage in any activity that brings him official income during the period of pension insurance on a mandatory basis.
• The total amount of the citizen’s security should not exceed the minimum subsistence level in the pensioner's territory of residence. When calculating collateral, all cash payments (travel benefits, utility bills, medicines) are taken into account. If support measures are paid at a time, then they are not taken.

At the federal level, a social supplement will be applied provided that the amount of cash security for a citizen with a minimum insurance experience for the appointment of a retirement pension is below the regional minimum living wage, which is lower than the federal one. A regional social supplement will be applied provided that the amount of material support for a citizen of retirement age is below the regional minimum subsistence level, which is higher than the federal level. The surcharge is established so that the value of the citizen's security, taking into account the surcharge, becomes no less than the regional size of the subsistence level.

Minimum old-age pension

Depending on the year of retirement, different conditions are necessary for calculating state security. As a general rule, the right to accrue state security for retirement age occurs under the following conditions:

• Men should be over 60 years old, women over 55 years old.
• The minimum length of service for an old-age insurance pension increases in stages from six years in 2015 to 15 years in 2024 (maximum size).
• A citizen must have a certain amount of retirement points. Under the existing pension system, a uniform increase in points is established by 2.4 from 6.6 in 2015 to 30 points by 2025. The amount of points depends on the contributions paid by employers for their employees to the insurance system and the length of time in service.

In the absence of the required minimum insurance period for calculating the retirement pension or the required points, an insurance pension is not required upon reaching the retirement age, a social pension is assigned.

The PFR website has a virtual calculator for calculating future pension contributions of a citizen of a country. Its main task is to explain the procedure for the formation of a pension and explain how the size of state security is affected by:

• the salary of a citizen;
• the amount of income of an individual entrepreneur;
• duration of employment;
• military service on conscription, parental leave;
• postponement of retirement;
• selected option in the insurance system.

The collateral option in the mandatory pension insurance system affects the annual accrual of points. When calculating only an insurance pension, the maximum value of points in a year is ten. When calculating both insurance and funded pensions, the number of points per year can be a maximum of 6.25.

Citizens who are 51 years old or less this year who have chosen to have two types of pensions in the insurance system before the end of 2015 can refuse to calculate the funded component of the pension and send six percent of their contributions to calculate the insurance component of the pension.

People who are 51 years old or less this year and who benefit from pension insurance contributions for the first time after the start of 2014 will be presented with a choice of security for a five-year period from the first transfer of contributions. If a citizen has not reached the age of twenty-three, this period shall be extended until the person is 23 years old.

When determining the security option, it should be remembered that the insurance component of the pension is increased by the state due to indexation on an annual basis. Part of the funded part is invested in financial instruments by non-state pension funds or management companies. The result of investing funds (profit or loss) determines the profitability of the pension savings of the future pensioner of the country.

The only option for calculating the insurance pension is for people who are 52 or more this year.

Pension calculation data on a virtual calculator are preliminary and cannot be perceived by citizens as the promised size of a future pension. All calculations are made in the current year. The actual amount of the pension is calculated by the Pension Fund of the Russian Federation when a citizen applies for its calculation, taking into account all the rights and benefits provided by law at the date of calculation of the pension.

An old-age insurance pension is considered as follows: the amount of points is multiplied by the price of one point during the appointment period and a fixed payment is added. When calculating the indicators of the current year are used:

• The fixed payout is 4,982.90 rubles.
• The price of the pension coefficient is 81.49 rubles.
• The maximum earnings before income taxes may amount to 85,083 rubles per month.

How to increase future retirement?

Citizens wishing to receive a decent pension in the future can take into account several tips:

• The salary of a working citizen should be as high as possible. For a year, a citizen can get a maximum of ten points in 2021, 8.26 points in 2018. In order to earn ten points, a person’s monthly income should be 73 thousand rubles, or approximately twice the average earnings in our country. Moreover, the pension will be the same in the future for citizens who receive 73 thousand rubles, and for working people who receive significantly more. If the salary of a citizen is half the maximum specified, then the citizen will be credited with half the points. The accumulated points in the calculation formula will be multiplied by a coefficient. The more points a future pensioner has accumulated by the time he enters a well-deserved rest, the more his pension will be.
• The income of the future pensioner must be official. For working citizens of the country, their employers pay insurance premiums from accrued wages. If a person receives an unofficial salary, then points will not be awarded to him. Pension will be minimal.
• The future pension of a citizen depends not only on income, but also on the person's working experience. A person needs to earn a minimum insurance period to receive a pension.The longer a citizen works, the more points he will accumulate. If a person transfers the time of retirement, he will increase his coefficient in the calculation formula of the pension, taken into account when calculating.

And one more life advice. A citizen can and should independently worry about his bright, secure future, especially if the minimum insurance experience for the appointment of an old-age pension is insufficient. There are plenty of tools for this in the modern world:

• You can save about five percent of your income in a deposit account with a credit institution.
• You can buy an apartment (room, garage) and rent it out.

Social pension

The amount of state support of citizens guaranteed by the state is a social pension. In our country, it is assigned only to citizens who are not able to work, and to citizens who have reached the age of retirees. The legislation of our country provides for types of social pensions, such as pensions:

• upon reaching age;
• on disability;
• due to the death of the breadwinner.

We list the categories of people applying for social state security:

• Disabled people.
• Minor children and citizens who are students in full-time educational institutions, not older than 23 years, who have lost one or both parents. These people can expect a minimum survivor insurance pension.
• Citizens of our country who have reached the age of 55 and 50 years, respectively, for men and women who live in areas of the Far North on a regular basis for the period of pension.
• People who have reached 65 and 60 years of age (respectively, citizens and citizens), as well as foreigners and stateless persons who have been living in our country for at least 15 consecutive years and have reached the specified retirement age. They are granted a social pension.

The minimum pension is the guaranteed amount of state support for citizens of the country. A civilized country cannot leave vulnerable groups without a livelihood.

The minimum amount of social pension for citizens who are not able to work, established for the current year from April last year:

The minimum level of pension accrual to citizens of our country will continue to be no lower than the minimum subsistence level in the territory where the pensioner lives. If the amount of state security in the amount with other payments is below the minimum subsistence level, then he will be assigned a social supplement.

As can be seen from the table, the minimum amount of the survivor's insurance pension for today in our country is not very large and living on this guaranteed money is quite problematic. The necessary conditions for calculating a pension in the event of the death of a breadwinner include:

• The presence of at least one day of work experience with the deceased breadwinner.
• The death of a breadwinner is not the fault of a disabled member of the family.

Government Pensions

Pensions granted under state security are monthly payments by the state to persons who have lost income due to the expiration of their federal civil service, as well as to citizens who are unable to work and have no means of subsistence. These payments, for example, include pension for the length of service of employees. Pension funds for length of service receive legally:

• Civil servants.
• A certain category of military personnel.
• Test pilots and astronauts.

Non-state pensions

Any citizen of the country has the right to profitably invest their money savings in order to generate income both through the FIU, and through an NPF or a management company. Non-state means pension funds paid on an ongoing basis under the terms of pension agreements.

A pension agreement is an agreement between a citizen and an NPF. The future pensioner pays pension contributions to the NPF, and the NPF will continue to pay him a non-state pension.

Summary

So, the modern pension system makes it necessary to have a minimum insurance period for a pension and a sufficient number of pension points for the purpose of state old-age provision. If these two conditions are not met, then an old-age insurance pension is not assigned, and a social pension is paid upon reaching retirement age. The minimum insurance period for a pension in six years will be 15 years. On average, a person begins his career at the age of 20, and ends at 55 or 60 years, depending on gender. The fifteen-year minimum length of service required for an insurance pension is a low standard. This threshold is quite surmountable for all residents of the country. Many of our citizens worked at one enterprise, a factory. Of course, this mainly concerns people of the Soviet era, when students went to distribution plants and remained there to work until retirement.

Of course, pensions in our country have grown in recent decades. Although the question of what is the minimum insurance pension for future retirees does not lose its relevance. Unfortunately, a decent level of pension has not yet been achieved.

The minimum insurance pension in our country remains a relative and indefinite concept. The minimum determines the cost of living. If the level of the minimum amount of the insurance pension assigned to a citizen is less than the subsistence level, then the state will provide the person with a social allowance.