The following truth is well-known: for a good old-age pension you need a good salary, received as long as possible in youth and maturity. But how many years do you need to work through to get a guaranteed pension? In other words, what should be the length of service for calculating a pension?
The necessary conditions
Since 2015, working Russians have a new system retirement benefits consisting of two separate components: insurance pension and pension savings. The second of them still does not work, so it remains to earn the first - insurance pensions. In order to qualify for them, you must:
- Men - reach the age of 60, women - 55 years. There are exceptions to this rule when old-age insurance pensions are assigned ahead of schedule.
- Have the required length of service for calculating the insurance pension, which is equal to 15 years, but this indicator will only work after 10 years, but for now it will be consistently increasing starting from 6 years in the current year.
- To collect the sum of individual retirement points (coefficients) is not less than 30, but this indicator will also be introduced only after 11 years, and so far it will consistently increase, starting from 6.6 this year.
The amount of individual retirement points (coefficients) is determined by the accrued and paid insurance contributions to the pension insurance system and by what is your experience in calculating the pension.
What is insurance pension and seniority?
Seniority is a period of time in a person’s life that affects the acquisition of a certain status (seniority, seniority, professional seniority, etc.). On the other hand, length of service is a special measure of a person’s labor activity, which has both quantitative and qualitative characteristics.
In previous years, the opportunity to receive and the size of the benefit was influenced by the length of service for calculating the pension, which is the time a person engaged in official labor activity with production pension contributions in the OPS system.
But, as mentioned above, it is the length of service required for an insurance pension. How does it differ from the concept of “seniority for calculating a pension”?
The Federal Law (ФЗ) No. 173 in force until 2015 operated on the concept of a retirement pension, which included two components: insurance and funded. The new Federal Law No. 400, which entered into force from the beginning of this year, removed the general concept of “labor pension” and at the same time raised its insurance component to a separate type of pension provision. This is a clear evidence of the market thinking of Russian lawmakers, who indicated in the preamble to the law that the basis for an insurance pension can be not only labor activities, but also other socially useful activities of citizens conducted in a state with a market economy.
Some analysts put an equal sign between a retirement pension under Federal Law No. 173 and an insurance pension under Federal Law No. 400 based on the proximity of their definitions in both laws. From this, in their opinion, the identity of the terms "seniority" and "insurance experience for calculating pensions" follows. However, the second of these concepts is undoubtedly broader, because In addition to periods of work with the payment of insurance contributions to the FIU, it also includes periods when such payments could not be made, and the citizen did not officially work (for example, the time when he received unemployment benefits).
What is the difference between the insurance component of a retirement pension under Federal Law No. 173 and the insurance component of a labor pension under Federal Law No. 400?
The changes affected the principle of accrual and conditions for granting pensions.For a retirement pension, the total pension capital expressed in rubles was calculated. For an insurance pension, pension capital is accumulated in the form of points (pension coefficients) with the value annually raised by the state in rubles. To receive a retirement pension, it was only necessary to accumulate seniority. An insurance pension will require a minimum length of service for accruing a pension (in fact, a minimum length of service) and the amount of individual pension points (ratios) at a level of at least six years and 6.6 points for the current year, respectively.
From 2016, these figures will grow. By 2024, it is planned to achieve the maximum established by Federal Law No. 400: the required length of service for calculating a pension will be 15 years, and the required amount of points - 30 points.
If you immigrated to Russia
The periods for calculating a pension under Federal Law No. 400 include those periods of time when work or other activity with the payment of insurance payments in the FIU was carried out on the territory of the Russian Federation. And if you moved to Russia from a country within the CIS and received Russian citizenship? Is the experience earned outside the Russian Federation taken into account when calculating the Russian pension?
Yes, it is taken into account, but partially. In 1992, all CIS countries (except Azerbaijan) concluded a special agreement on this issue. It was determined that if citizens relocate to other countries within the CIS, then when calculating their pension in a new country of residence, their entire work experience is taken into account (note, it is the “work experience”, because the agreement was from 1992!) Acquired on the territory of the former USSR until 03/13/1992
Work experience of an immigrant outside the Russian Federation after the beginning of the pension reform in it, i.e. since 2002, it has been added to the Russian insurance period upon confirmation of payment of insurance payments to the PF of the former country of residence.
What periods of forced absence of labor are included in the experience?
Federal Law No. 400 takes maximum account of the rights of those citizens who are forced to interrupt their work and, accordingly, the payment of insurance pension contributions. A person can temporarily lose his job and live on benefits, get sick and stay on sick leave for several months, mothers look after young children, people look after sick or elderly relatives. Often the wives of contract servicemen cannot find work in small military towns. There are also many cases where people are unfairly sentenced to imprisonment, which interrupts their length of service. Finally, citizens simply serve in the armed forces of the Russian Federation or other state agencies.
Federal Law No. 400 includes all such non-insurance periods in the length of service if, before or after them, the persons had periods of work or other activity with payment of insurance premiums. Consequently, the concept of “seniority” includes the length of service for accruing pensions and periods of absence thereof, listed in Federal Law No. 400.
Calculation of seniority for accrual of pension
Federal Law No. 400 establishes a calendar procedure for calculating the length of service, that is, one calendar year of work (or other activities accompanied by insurance payments) is equal to one year of service. It may happen, for example, that during the period of caring for a small child, a citizen also took care of an elderly relative. Other coincidences of two non-insurance periods in time are possible. In this situation, any of these periods at the choice of a citizen can be recorded in the insurance record.
Self-employed citizens, farmers, citizens employed by individuals, are entitled to include in their insurance period those periods of work (activity) during which insurance payments were made to the PF of the Russian Federation.
If citizens who receive long service pensions, as well as disabilities received while performing civil service, also apply for an insurance pension, then their periods of service do not include service periods taken into account when calculating received pensions.
An interesting situation with calculating the length of insurance for authors of works of literature and art, who usually sell licenses for their use and pay contributions to the PF from the amounts received. If in a particular year the amount of payments to the PF from such an author was more than the fixed contribution determined in the Federal Law No. 212, then one full calendar year is entered into the insurance experience of the author. If the amount of the author’s payments in the Pension Fund for the year is less than the fixed contribution under the Federal Law No. 212, then the period calculated in months in proportion to the amount paid is added to his insurance record.
How the experience for calculating pensions is calculated and confirmed
In our country, the calculation of the insurance period is divided into two time intervals:
- before using the system of universal personified accounting in 1996 in accordance with Federal Law No. 27;
- after the introduction of Federal Law No. 27.
In the first interval, in addition to individual registration data (if any), you can confirm the existence of insurance periods that are included in the length of service by certificates from employers, government agencies or municipalities. In the second interval, such confirmation is made only according to information from the universal personified accounting system.
If documents on a citizen’s work related to the first time interval are irretrievably lost due to a natural disaster and cannot be restored, then periods of his work in the territory of the Russian Federation can be established on the testimony of two or more witnesses. It is allowed to use this method of confirmation of the insurance experience and in the event of loss of documents through no fault of the employee due to careless storage, destruction by malicious intent, etc.
What is the conversion of pension rights
Before the start of the pension reform in the Russian Federation in 2002, two factors influenced the size of the pension:
- Total length of service for calculating a pension (or, otherwise, total length of service). He, like the length of service under Federal Law No. 400, is defined as the total duration of labor and other activities useful to society until 01.01.2002 with the inclusion of certain periods when a citizen was forced to work (their list is much less than that of the length of service). Total length of service is not associated with any insurance premiums.
- The average monthly earnings for the last two years before retirement, or for any five-year labor period.
Consequently, the amount of the pension until 2002 was determined by experience and earnings in a selected period of time.
Since 2002, each citizen began to accumulate in his personal account in the Pension Fund the estimated pension capital from the monthly insurance contributions that employers make. But what should the Russian authorities do with the pension rights that citizens who worked before 2002 also accumulated? How to combine them with the accumulation of insurance premiums?
This problem was solved by the conversion of pension rights carried out in 2002. It consisted in the transfer of these rights that did not have a real embodiment into equivalent calculated pension capital, expressed in rubles. In 2010, this capital was increased as a result of valorization for all citizens by 10%, and for people who had a working experience before 1991, an additional 1% for each year of service.
Do I need continuous experience to accrue pension benefits?
There is no legal definition of this type of experience in the current legislation. But, having analyzed a number of current regulatory documents, we can conclude that continuous experience in calculating pensions is the duration of the last work at one enterprise without a break or at a number of enterprises, provided that the breaks did not exceed the established terms (usually from one to three months in depending on the reason for the interruption of work).
According to the current legislation, when determining the size of the insurance pension, the length of service is not taken into account. Since January 1, 2007, according to the Labor Code of the Russian Federation, the amount of benefits paid for temporary incapacity for work also does not depend on this indicator. Now it is calculated only by the length of service.
"Northern" experience
The “Northern” seniority for calculating a pension is an indicator provided for those who live in the Far North and in areas equivalent to it, as well as for those who previously worked in such a locality. Citizens of these categories can retire early (insurance). This right is granted to women from the age of 50 and men from the age of 55 who have worked for 15 or 20 calendar years, respectively, in the Far North or in areas that are equivalent to it, if they have an obligatory length of service for pension accruals of 20 and 25 years, respectively.
Women with two or more children who have worked respectively from 12 or 17 calendar years in the Far North or in areas equivalent to it can also go on an insurance pension of 50 years if they have compulsory insurance experience of 20 or more years old.
In addition, men and women who have worked in the Far North for 25 and 20 years respectively in fishing, reindeer husbandry or in the hunting industry can receive a pension as early as 50 and 45 years old.
The situation in Ukraine
How is the experience of calculating a pension calculated in a neighboring state? Ukraine has implemented a pension system through about the same stages as the Russian Federation. So, starting from 1991 and ending with 2004, it was regulated by the Pension Law, which provided for accrual of pensions for work experience and average monthly earnings for a certain period of time. In exactly the same way as in Russian legislation before the beginning of the pension reform in 2002, Ukrainian pension legislation combined the periods of work of a citizen and some periods of involuntary absence of labor activity into the concept of “total work experience”.
Since 2004, the Law on Pension Insurance came into force, which is an analogue of the Federal Law No. 173 and operates with the concepts of length of service and insurance premiums. In subsequent years in Ukraine there were several attempts to continue the pension reform, but they did not lead to specific changes in legislation, except for a phased increase retirement age for women under 60 years old.
Certain changes aimed at tightening the rules for the provision of pensions to selected categories of employees are taking place this year. Starting from April 1, when assigning old-age pensions on preferential terms for work in harmful and difficult conditions, the retirement age for women begins to gradually increase from 45 to 50 years. At the same time, the total length of service, which is necessary for granting preferential pensions to both men and women, will gradually increase by 5 years.
Long-service pensions will now also be awarded after a longer total length of service, and for some categories of workers after a longer necessary length of service. This applies, in particular, to workers in locomotive crews, workers in exploration parties, loggers and rafters, sailors, teachers and doctors, artists and others.
