The main type of security for any citizen who has reached working age is an old-age pension. As a rule, it is this type of payment that is the sole source of income for a pensioner, so at some point any person thinks about what kind of pension will be awarded to him. Let's talk about how a pension is formed.
Formation of an old-age pension
The current system in our country is of a distributive and accumulative nature, that is, it turns out that the situation is that, on the one hand, current retirees receive funds received from the employer throughout their lives, and on the other, personalized capital accumulates.
To understand how a retirement pension is formed, it should be said about where the deductions come from. The largest part of them is transferred by the employer and goes to the formation insurance part of the pension. These funds are accounted for in the citizen’s personal account, but they are fully spent on the current needs of the Pension Fund, therefore they represent more conditional obligations of the state than real money.
Only 6% of deductions are allocated to the funded part. These funds are invested in order to receive income. This ensures the growth of own pension capital. You can manage this part by staying in the PFR or by joining a non-state pension fund. The choice of an NPF is made independently by a citizen insured in the OPS system. Otherwise, its accumulations are managed by Vnesheconombank.
How to transfer your savings to non-state pension funds?
So, now it has become a little clear how the funded part of the pension is formed, but we’ll talk about how to transfer your savings to non-state pension funds.
In order to transfer the funded part to NPFs, you must first contact the selected organization and submit the appropriate application. After some time, the funds will be transferred under the management of the fund. Most Russian residents are in no hurry to transfer their own savings to non-state funds, as they are very afraid of losing everything that has been earned with such labor for many years. But when analyzing the question of how a pension is formed, one should not forget that the work of each NPF is very tightly controlled by the state today, and various financial crises have already been overcome by large funds, they have achieved high rates of return, are highly reliable and can guarantee the safety of funds to your customers. With the transition to NPFs, you can really get real profit: many such organizations are ahead of inflation, in contrast to the state-owned management company.
What kind of pension will a person receive upon reaching the appropriate age?
After a citizen reaches retirement age, he will receive payments in an amount equal to the sum of insurance and accumulated pension capital, which are divided by the expected number of months of payment. To date, this figure is 228 months.
In addition, today also provides for a complete refusal to receive the funded part of the pension. Even before the onset of 2015, every working citizen was given the right to choose: to join the NPF or not.In such a situation, his employer simply had to stop making contributions to the funded part, and all contributions had to be transferred to the insurance part.
Another innovation in the legislation concerns the change in the system of accounting for insurance savings. So, how is an old-age pension formed now? Now the right to an old-age pension will be accrued according to the points system, which will grow depending on the length of service and the size of wages.
How are the funded and insurance parts of pensions different from each other?
The most important difference between the funded part and the insurance part is that they have different spending patterns. The cumulative part cannot be touched by the state in any way for the reason that it does not have the right to do so. The owner is given the opportunity to transfer it to the management of a state fund company (Vnesheconombank) or a non-state pension fund if he wants to make the amount of payments substantially larger. He will receive them after he retires.
How does the state use the insurance part of the pension?
The state uses the insurance part for its own needs and does not even provide the opportunity to receive investment income. Most experts are of the opinion that in 10-15 years the Pension Fund will face a deficit, and then it will begin to have problems with payments. In this case, it is the insurance part of the pension that will suffer, because it is not stored on the personal accounts of citizens, but is used at the moment to pay a pension to current people of retirement age. That is why the state is trying to interest people in the fact that they later retired and are engaged in the formation of their funded part by reducing the insurance part.
How is a pension formed by an individual entrepreneur?
Individual entrepreneurs, like ordinary citizens, have every right to receive a pension, because they also pay certain insurance premiums. So, let's figure out how a pension is formed from them. An individual entrepreneur pays a fixed amount annually to the Pension Fund, even if he does not have any income. In addition, more recently, the State Duma proposed a draft for consideration to increase the size of this payment. So, perhaps, in the future, individual entrepreneurs may face such a nuisance.
Can an individual hope for a good pension?
Businessmen should not rely on the state. The size of the pension may not be higher than a simple social pension, which is issued to citizens with an experience of less than five years or no experience at all.
The whole problem is that insurance premiums are calculated depending on the minimum wage, and therefore the size of pensions is so small. Sometimes such contributions are not enough even to pay a minimum pension.
The size of pensions completely depends on how much insurance premiums are paid to the Pension Fund, therefore those entrepreneurs who also work under an employment contract will do much better, because in addition to their own contributions, the employer also pays for them, and this will be taken into account when calculating a pension.
So, here we have figured out how a pension is formed. In conclusion, I would like to say that to increase your pension it is best to pay additional contributions, but this is already being done on a voluntary basis. Such a serious decision should be made only on their own.
