Early retirement after raising the retirement age and clarification from the Russian Pension Fund

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The increase in the retirement age is perceived negatively by many citizens, but at the same time the state strives to ensure that people independently decide not to retire after reaching a certain age.

For this purpose, a deferred pension is offered, thanks to which the future payment amount is increased. The decision to assign a state benefit is made solely by the citizens themselves, so the benefits of further work without receiving a pension should be assessed.

What does the concept mean?

In 2021, a pension reform was carried out, thanks to which the age of pensioners was increased, and it also became possible to apply for payment several years after reaching the established age (65 for men and 60 for women).

For each additional year of work, the state offers an increase in the fixed payment . This amount is set at the state level and is also subject to indexation annually. Additionally, when continuing to work without receiving a pension, special increasing coefficients are established.

Attention! This decision of the Government is aimed at encouraging citizens to postpone going on vacation, since representatives of the Pension Fund claim that it is difficult for the fund to cope with high payments due to the reduction of working-age citizens and an increase in the number of pensioners.

Every citizen has the right to delayed registration of a pension. A standard formula is used to calculate pensions, so if retirement is delayed for several years, this increases all indicators.

The calculation process assumes the following values:

• IPC is an individual coefficient, and its size depends on how many years the citizen has officially worked;
• SIPC – cost of one IPK;
• K1 and K2 – increasing coefficients, which increase when going on vacation is delayed;
• – a fixed amount that changes annually.

Attention! If a person has reached the age of a pensioner, then before submitting documents, PF representatives are recommended to make calculations to determine the benefits of delayed retirement.

Retirement age in Russia from 2021

In October 2021, the President of the Russian Federation signed a Decree on amendments to Federal Law No. 400-FZ “On Insurance Pensions”. It establishes a reduction in the retirement age, which was originally proposed by State Duma deputies. The law stipulates the following provisions:

• The right to receive old-age insurance payments is received by men at 65 years old, women - at 60;
• the age for retirement will be increased gradually;
• The law starts in January 2021.

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The state encourages delayed retirement in old age, because the number of working-age population in the country is decreasing and the number of pensioners is growing. The right to such registration will remain during the transition period and subsequent years of reform. The new law provides for an increase in the retirement age for men and women:

Is it beneficial to postpone

If a citizen decides not to retire immediately after reaching 60 or 65 years of age, then if the payment is made late, he receives certain benefits.

These include:

• Every year the increasing coefficients increase significantly, which ultimately leads to a significant overestimation of the monthly pension payment;
• growth of the fixed part, which is applied during calculations;
• This solution is useful for people who cannot apply for insurance benefits because they do not have the required length of service, so it is advisable to work for a few more years in order to count on substantial security.

But late registration of pension payments is relevant only for citizens who work officially, as well as those who receive a high amount of earnings, from which insurance contributions are transferred to the Pension Fund.

Early pension with deferred payments for 8 years

The government does not dare to cancel the possibility of vacation for doctors, teachers and creative workers. To retire early, it is enough for them to have the necessary special work experience in their profession and position.

• Teachers – 25 teaching experience,
• Medical workers - in rural areas - 25 years, in urban areas - 30 years of special experience,
• Ballet dancers - 15 years, drama theater artists - 30 years.

At the same time, the reform involves a deferment of pension payments for beneficiaries who retired early. Conventionally, such a deferment will be staged, which involves a deferment of 1 year annually. For example, a citizen who retired early in 2023 will have to wait 5 years for payments. For beneficiaries retiring in 2026, they will have to wait 8 years.

We remind you

that to obtain the right to early retirement you must meet several requirements. One of them is compliance of the position held with the requirements of professional standards, for which the specialist must have the necessary training (professional education: advanced training and retraining courses)

What are the disadvantages?

Delayed pension registration has some obvious disadvantages:

• if a citizen receives payments from the state, then indexation occurs, which leads to an increase in benefits;
• the total amount of the pension for a period of 10 years will be higher than the payment issued 10 years after reaching the pensioner’s age, and financial benefits can only be received after another 12 years;
• life expectancy in Russia is considered quite low, so most of the population simply will not live to see 70 or 75 years, which will lead to completely wasted savings;
• since a person refuses benefits, he will have to engage in work, which is not always possible due to health conditions, and also negatively affects mood and life expectancy, and this is especially true for people who are forced to work under dangerous or harmful conditions;
• due to old age, labor productivity significantly deteriorates, so pensioners receive low wages, which are not enough to ensure an optimal standard of living;
• for each year during which an elderly person does not apply for payments, an increasing indicator of 1 is applied, so for 10 years it increases to the maximum value represented by 10, but if a citizen works without a state benefit for 11 years, then when calculating his benefit according to -10 will still be used;
• citizens will not be able to count on indexation of their pension, so it will be calculated only after the person becomes an official pensioner.

Due to such numerous and significant shortcomings, each person must independently assess the advisability of a delayed vacation.

Pros and cons of leaving late

Delayed care has its advantages and disadvantages. Among the obvious advantages are:

• Increased pension provision. If a person works, his work and insurance experience continue to grow. The amount of insurance contributions to the Pension Fund increases, which leads to the accrual of more pension points. When retiring for a well-deserved retirement, the size of the elderly person’s pension will be higher due to this.
• Application of increasing coefficients. According to Law No. 400-FZ, the fixed payment and the insurance part are recalculated using an increasing index.

If we talk about the minuses, then these are:

• Low life expectancy of Russians. This means that a person does not have to go on vacation at all, since he will not live to see the age pension. This can happen if you choose a distant date.
• A citizen receives only one salary. If the pensioner had continued to work and receive pension benefits, the final amount of payments could have been greater (this point only applies if the pensioner’s salary is small or until the person who chose the deferred option goes on vacation and begins to receive pension benefits).

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Example process

Not all older people understand how their state pension increases if they do not apply for payment immediately after reaching the required age. Therefore, the following rules and nuances are taken into account:

• thanks to bonus coefficients, the amount of payment from the state increases;
• for each year during which a citizen does not apply for a pension, the coefficients and the fixed payment increase, which has a positive effect on the final amount of the payment;
• for example, if a person applies for a pension 5 years after the right to benefits arises, then his payment increases by approximately 40%.

Pension Fund representatives suggest that citizens who do not understand the benefits of deferred pension registration study the following example:

• the woman has 30 years of experience, so after reaching the age of 60 she submitted an application to the Pension Fund to receive a pension, but continued to work;
• for such a long period of work, the pensioner has accumulated 120 points, and the cost of one point from 2021 is 93 rubles;
• fixed payment is equal to 5686.25 rubles;
• if a woman applies for a pension at age 60, then the size of her pension will be: 120 * 93 + 5686.25 = 16846.25 rubles;
• if she decides to receive benefits from the state in 5 years, when she turns 65, the amount of the payment will increase: 120 * 93 * 1.45 + 5686.25 * 1.36 = 16182 + 7733.3 = 23915.3 rubles.

Thus, when contacting PF representatives 5 years after the pensioner reaches retirement age, the pension will be increased by 7,069 rubles. If a woman wants to receive benefits from the state in 10 years, then she will be 70 years old, and the amount of her payment will be: 120 * 93 * 2.32 + 5686.25 * 2.11 = 25891.2 + 11998 = 37889.2 rubles .

Reference! In fact, the size of the pension will be even higher, since indexation will be carried out, and the cost of each pension point and the fixed amount will increase, for which appropriate decisions of government bodies are made.

If a person who refuses early registration of a pension continues to work, he will receive a high salary, which will allow him to increase the number of points as his work experience increases. Such a decision guarantees an improvement in the financial condition of the citizen when he decides to stop working.

Of course, many people believe in the benefits of deferred retirement, but this option is only suitable for citizens who feel good and are confident in their health. If an elderly person has serious health problems, then it is important to take a well-deserved rest in order to pay attention to family and other important issues.

Typically, the difference between the pension of a person who retires at 65 will be about 40% less than if he had worked another 5 years without receiving state benefits. But to cover such a gap, it will take about 10 years, so only at the age of 80 can you feel a significant difference between the payments of different citizens.

Men rarely live to this age, since according to Rosstat, the average life expectancy of men is about 77.7 years. For women the figure is 85 years. Therefore, many Russians are confident that there is no point in delaying retirement.

Delayed retirement: profitable or not?

On January 1, 2015, a new law on insurance pensions came into force. One of its norms provides that upon reaching retirement age, a working person can postpone his retirement. The Department of the Pension Fund for the Khabarovsk Territory has assessed the first results of this legislative norm and can already say for sure whether it is beneficial or not.

We are talking about this with Irina Glazyrina, deputy manager of the OPFR for the Khabarovsk Territory.

Irina Glazyrina, deputy manager of the OPFR for the Khabarovsk Territory

– Irina Aleksandrovna, in society you can often hear talk that the retirement age in Russia will soon increase. And, they say, the first step has been taken: for now, citizens are being offered to voluntarily postpone retirement. Please tell us what this legislative norm actually provides for?

– The new pension legislation provides a mechanism that encourages citizens to retire later. There is no talk of any forced increase in the retirement age. The incentive is built on the benefit for the future pensioner himself: if a citizen does not apply for it when he becomes eligible for a pension (it does not matter whether it is a generally established age or an early pension), additional pension points are awarded to him for each full year of delayed retirement. In addition to the fact that there are additional coefficients, the person continues to work, and his pension rights are formed without any restrictions.

– But pensioners who continue to work also have insurance contributions, for which pensions are adjusted annually in August.

– That’s how it is, but for working pensioners, not their entire salary is taken into account, but within three minimum wages, now it’s about 18 thousand. Accordingly, the August recalculation towards pension is about 200 rubles and a little. And this is the maximum that a working pensioner can claim.

Compare: for other working citizens (not pensioners), the maximum salary at which pension rights are formed is 796 thousand rubles per year, which is about 66 thousand per month, while for a working pensioner only 18 thousand.

– More than a year has passed since the new law on pensions came into force. Can you name the specific amount by which the pension increased for those who decided to postpone their retirement?

– Those people who did not apply for a pension last year and came for it this year, that is, postponed their pension for a year, will receive a monthly increase at the expense of “premium” points from 250 to more than 800 rubles.

- In one year! And if this man had postponed his exit for five years...

– Over five years, the pension increase will be more than 1.5 times.

– Who exactly postponed their pension in the Khabarovsk Territory?

– Basically, now those who have the right to retire early, before the generally established age, are granted a pension later. Although there are also people who, at a generally established age, postpone their retirement. And there have even been requests from citizens who are interested: my age is approaching, but I don’t want to apply for a pension, what should I do?

– How should we proceed? Do you need to write a statement, call or warn?

– There is no need to declare this. It’s just that a person has the right to a pension, but he doesn’t come to assign it.

– Does the Pension Fund somehow track that a person was supposed to come to apply for a pension, but he didn’t?

- No, it turns out after the fact. For example, a woman was supposed to come for an appointment at 55, but came at 57. It is clear that she postponed her retirement. And then the Pension Fund specialist calculates her payment taking into account bonus coefficients to the formed pension rights.

A question may arise regarding early appointments. Here it would be useful for a citizen to say: “Look, I had the right to early retirement, but I didn’t apply.” The fact is that it is not always possible to immediately see the right to early retirement - suddenly some information is missing.

– How advisable is it in general to make a decision about later retirement? After all, all people are different: some have a small salary and are waiting for a pension as a significant increase in the budget, some are working early, and some have reached the generally established retirement age and are simply tired.

– As for the generally established age, here we need to think: if a person has a fairly high salary level and he is not going to quit in the near future, of course, it is advisable to use the right. Because with a high level of earnings, he will not feel much improvement in his material level from the assigned pension. But when, for example, in three years he actually gets ready to retire, fifteen to two thousand will be a significant increase for him.

As for early retirement workers, it can be recommended to make this kind of decision, because the early pension will be significantly lower than under equal conditions when retiring at the generally established age. After all, a person does not actually work for five years, and, as a result, his length of service is significantly less than that of someone who retired at the generally established age. It is because of this that early retirement has always, and not just now, been lower.

– Well, that’s how I retired at 50 years old according to the northern experience... Now I regret that at the time when I applied for the pension, there was still no right to postpone retirement.

– Yes, now a working pensioner’s pension is recalculated at the rate of three minimum wages, the increase is insignificant. Therefore, a pension assigned ahead of schedule will always be lower than that of someone who receives it within the generally established period.

– But people are still waiting for early retirement as a blessing.

– Understanding does not come immediately. I was recently on a business trip to Amursk, Komsomolsk, Solnechny. Conducted meetings in work collectives. And I observed the following: people seem to know that such a legislative norm exists, but they don’t think of applying it to themselves. And when you give examples, you can see from the audience that this is a discovery for them.

They are waiting for this early retirement like manna from heaven, but they don’t think about the fact that after leaving work they will end up with much lower incomes. God willing, if your health allows you to work until the end, but in life anything can happen. There are situations when a person falls ill unexpectedly and is forced to leave work. Someone needs to look after their grandchildren, help their children... Or the company will give preference to a younger employee. And in the end, the person will be left with the small pension that he received ahead of schedule.

Why do I focus on early development? Because, as a rule, these are people who are still able to work, healthy, and energetic. Their children are already adults, and they have the opportunity to take care of themselves, of their impending old age.

- Moreover, if you have the opportunity to work, provide for yourself with your labor, at this age such a blessing should be treasured.

– It’s also worth thinking about the right to delayed retirement because later it will always be a shame: others have a higher pension! And it will involuntarily begin to seem that they have been deceived. But, based on the new legislative norms, it’s not a matter of deception, but the ability to see the benefit for yourself and take advantage of the opportunities offered. Or don't use it. But then you will only have yourself to blame.

How to apply

If a person decides not to retire after reaching retirement age, then he simply does not need to draw up and submit an application to the Pension Fund office. It is enough just to continue working. This is due to the fact that in order to receive benefits from the state, each citizen must submit an application and other documentation proving the right to payment.

Important! After reaching the age of a pensioner, you can apply for state benefits at any time. The process can be carried out even by people who continue to work, and are therefore represented as officially employed citizens. But at the same time, they will not be able to count on annual indexation, although the pension will increase due to an increase in length of service.

"Refused." Is it possible to increase your pension by deferring it?

Article on the topic

How to increase your pension?

Today, legislation offers several strategies for behavior during the retirement period. You can simply receive a pension, you can receive it and continue to work: in this case, the labor pension is paid in a reduced amount and the length of service is not taken into account. Or you can continue to work, giving up your pension. AiF decided to look into the third option: is it profitable?

The possibility of increasing a pension due to non-receipt is provided for by law (Article 23-1 of the Law “On Pensions”, Presidential Decree No. 136 of March 18, 2012) when applying for an old-age pension later than reaching the generally established retirement age (or refusing receiving an already assigned old-age pension) with at least 20/25 years of work experience (for women and men, respectively).

For the first full year of work without receiving a pension, it will be increased by 6% of earnings accepted for its calculation, for the second - by 8%, for the third - by 10%, for the fourth - by 12%, for the fifth and each subsequent year - by 14%. If work without receiving a pension lasted less than a full year, then the increase for every two full months of such work is 1%. At the same time, the pension is not limited to the maximum amount (75% of earnings). As a result, over 5 years of work without receiving a pension, its size will increase by 1.7-2 times. This option, of course, is suitable for those who have maintained their health and desire to work by the retirement threshold.

Today, many are interested in the question of whether the terms of the deferment will change in a more attractive direction. As Deputy Minister of Labor and Social Protection Valery KOVALKOV , the conditions for “bonuses” for citizens for continuing to work after reaching the general retirement age without receiving a pension were taken into account the financial capabilities of the Social Security Fund. “The average period of work after a pension is granted is five years. During this time, you can increase your pension by 70%. For comparison: in Russia, over the same period, you can increase your pension by 50%. The number of workers who have taken advantage of the opportunity to increase their pensions is gradually growing. According to the latest data, more than 6 thousand people receive a pension with a “bonus,” the expert said.

AiF turned to Larisa OLEYNIK , mathematics teacher with 41 years of experience , who tried deferring her pension while continuing to work for one salary.

According to the people's expert, this is beneficial:

“When I reached retirement age, I also initially wanted to work and receive a pension. But the lawyers advised me to postpone it. As a result, I worked at school for three years without a pension, and during this time it increased by about 20%. I was wondering what the pension of my peers with the same work experience was. Compared to them, today my pension is approximately 1 million larger and amounts to 4 million.”

By the way

The pension systems of many countries have a funded component.

In Belarus, according to representatives of the Ministry of Labor and Social Protection, the introduction of a mandatory funded component is not planned. But this does not cancel the voluntary format - civil insurance under additional pension programs offered by insurance organizations.

AiF asked how much can be saved through these programs. One of the large insurance companies in Belarus provides an approximate calculation on its website: if a man from the age of 40 under an additional pension insurance contract begins to pay insurance premiums - $100 monthly, then by the age of 60 (retirement age) his insurance payment will be $33,580. Then there is $9,580 more than if he had simply put that $100 on the table. Insurance premiums accumulate and increase due to interest accrued on them.