The 21st century has brought many innovations for Russian citizens in all spheres of the country's economic and social activities. This trend and the pension sector did not pass by. Now, steel deductions are divided into insurance and funded. Non-state firms were engaged in the latter. In addition, each person himself could choose which company to transfer his pension to, or even stay on old insurance coverage. But starting only to gain momentum in 2010, the new practice stopped in 2014. Freezing the funded part of the pension until 2020 is what followed then and awaits the citizens of our country in the future. What is behind these high-profile phrases? About this, and much more will tell our article.
Freezing the funded part of a pension: what does it mean?
The latest news from the State Duma is not comforting: until the end of 2020, citizens who transferred contributions to the funded part in the amount of 6% will be left without an old-age pension. What does it mean and is it? To answer these questions, let's look at the basics of calculating pension benefits in our country.
What pension is made of: the latest news
In simple words, the pension currently consists of several parts.
- Base rate.
- Insurance part.
- Funded pension.
The basic part is a fixed 6%, which are established by current decrees. This percentage of the salary is required to pay all employers whose employees receive a "white" salary. All funds transferred to the pension fund (hereinafter referred to as the PF) are used to pay the pensions of people who have now left for a well-deserved rest. On the payer's final account, the base part rate is not reflected in any way.
The insurance part is 10% of the profits of Russians. Funds received at this rate, as well as the basic ones, are used to pay pension subsidies to existing pensioners. In addition, the accumulated amount is guaranteed to be paid upon reaching the payer of a certain age. All money received by the PF from the employee is transferred to points, which subsequently participate in the calculation of the final amount.
Accumulative - part of the funds in the amount of 6% of the earnings that people transferred to non-state pension funds (NPFs). All funds received are summed up in the citizen's account.
Reference. It turns out that 22% of pension contributions are deducted from earnings. But many people know that our salaries are reduced by income tax, which is 13%. The fact is that income contains only 6% of the base rate. The employer transfers the remaining amount in excess of the accrued salary.
Funded moratorium for citizens - what are the consequences?
After the government issued a decree on a new procedure for accumulating age pensions, the Russians were able to choose non-state pension funds for the formation of savings. The beginning of this trend was laid in 2010, but, after 4 years, it stopped. Then the parliament issued the first decree on freezing the funded part: they began to transfer 6% of the salary to the Pension Fund. This happened at the end of 2013. The decision is dated December month.
The essence of this innovation is to transfer 6% of the salaries of citizens to the Pension Fund in order to eliminate the shortage of funds regarding the payment of pensions for existing pensioners. But this bill does not mean at all that a person will lose this money. The pension fund transfers all the amounts received to the insurance part in balls, which, after leaving for a well-deserved rest, are converted into real money. And the more people made deductions, the more points he will collect for retirement.
Freezing the funded part: what President V. Putin says
At a president press conference in 2013, Vladimir Putin answered all the questions of the population. 2013 was the beginning of the crisis, which drastically swept our country, and urgent clarification of the situation of the chapter was required. At the same meeting, the president clarified the situation in the pension area.
Against the backdrop of the current economic crisis in our country, pension funds were in a difficult position. If until 2010 the fund was replenished by 22%, which levied on the salaries of the working population of Russia, then from January 1, part of these savings was transferred to non-state pension funds. The government had to allocate additional money from the federal budget to ensure payments to all pensioners. Analyzing the current situation, the State Duma came to the conclusion about the need to suspend the activities of these funds and the temporary freezing of assets in their accounts. This measure will be taken in the coming 2014, and according to the plan will last until the beginning of 2015.
After the first-person press conference, the government issued the amendments under the number 351 dated 12/04/2013. The document, among other things, refers to the suspension of pension savings of citizens until 2015.
But the "indexation of pensions" did not end there. In the subsequent period, such amendments were published with verified constancy, and, as a result, the moratorium lasted until 2017.
In the period from 2014 to 2017, the funded part of the pension was frozen. Those 6% that used to go to savings are now transferred to the PF. Thus, the state closed the shortage of pension money. But in 2017, this process did not end. In December 2017, the State Duma issued fresh amendments.
What to expect for people in 2021: news from the State Duma
Decree 413 extended the moratorium on pensions until 2021. That is, from the beginning of 2021 the law is no longer in force. And this means only one thing: the frozen 6% should “unfreeze”, NPFs will again begin to receive money, and ordinary citizens of the country will ensure a comfortable old age.
The government has increased the retirement age. In particular:
- men under 65 years old;
- women under 60 years old.
Dmitry Medvedev was the first to say that changes in pension legislation have long been needed in our country. Raising the retirement age will ensure that the Pension Fund overcomes the crisis, and will allow citizens to accumulate more points and amounts to be paid in old age. According to the prime minister, many will benefit from these changes, including ordinary citizens.
In practice, the situation of Russians is not quite so. Freezing pension savings of 6% will negatively affect the final value of old-age payments. NPFs offered better conditions, higher rates, the ability to increase the size of payments. In addition, the cumulative part:
- accumulates in rubles (and not in balls);
- invested and increased.
After the publication of 413 laws, Russians lost the opportunity to increase pensions at the expense of NPFs for another 3 years. But it is still unknown what these pension reforms will lead the country at the end of 2020, and whether the moratorium will not be extended for another few years.
The country's budget for 2019-2021 promises a surplus. This suggests that the economy overcame their crisis situation. But the freezing of pensions has been extended until the end of 2020 and it is not clear whether the moratorium will be lifted from the beginning of 2021, or another resolution will be issued. According to political analysts, changes in the pension sector will improve the situation of citizens, provide a decent, comfortable old age. But more and more fresh decisions are coming out, laws are changing, the economy is undergoing global changes. In such an environment, only time will tell what awaits us next.