Deferred pension: what is it, is it profitable or not, how to apply

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Old age pension

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.

Benefits of leaving late

There are polarizing opinions on whether delaying retirement is beneficial. The main positive point is that the amount of security established by the Pension Fund (PFR) will be higher compared to payments to citizens who are assigned a pension immediately upon reaching the age limit.

Premium odds

Only recipients of insurance coverage can apply for premium coefficients (PC) for pensions. PC – values determined by law. They are established separately to the fixed payment and the insurance part in order to motivate citizens to go on vacation at a later date.

The values differ for citizens who have been granted early retirement and for those who go on vacation on a general basis.

PC for a fixed payment with the right to an early (preferential) pension:

1 year – 1.036;
2 – 1,07;
3 – 1,12;
4 – 1,16;
5 – 1,21;
6 – 1,26;
7 – 1,32;
8 – 1,38;
9 – 1,45;
10 and more – 1.53

PC for a fixed payment upon retirement on a general basis:

1 year – 1.056;
2 – 1,12;
3 – 1,19;
4 – 1,27;
5 – 1,36;
6 – 1,46;
7 – 1,58;
8 – 1,73;
9 – 1,90;
10 and more – 2.11

PC to the insurance part with the right to an early (preferential) pension:

1 year – 1.046;
2 – 1,10;
3 – 1,16;
4 – 1,22;
5 – 1,29;
6 – 1,37;
7 – 1,45;
8 – 1,52;
9 – 1,60;
10 and more – 1.68

PC to the insurance part upon retirement on a general basis:

1 year – 1.07;
2 – 1,15;
3 – 1,24;
4 – 1,34;
5 – 1,45;
6 – 1,59;
7 – 1,74;
8 – 1,90;
9 – 2,09;
10 and more – 2.32

Increase in IPC

From the earnings of each employee, the employer makes contributions to compulsory pension insurance (MPI). The amounts of money are transformed into pension points (PB) and are reflected in the personal account. The individual pension coefficient is the sum of all pension benefits. The IPC is multiplied by the cost of one point on the date the benefit is established.

The more points earned, the higher the total payout amount.

Delayed retirement allows a person to earn additional PB. This will increase the size of future pension benefits. Regardless of the salary amount, the maximum IPC that a person can receive in one year of work is limited. In 2021 – 9.13 PB, in 2021 – 9.57 PB. Starting in 2021, you can earn a maximum of 10 PB.

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Until 2021, there is a ban on transferring contributions to the funded part of the pension. The money goes only to the insurance part. If the restriction is lifted, for citizens who decide to create savings, the maximum annual IPC will be 6.25.

Growth in pension savings

Late retirement can be useful for citizens who do not have enough length of service to qualify for old-age insurance. Every year the requirements for this indicator are becoming stricter. The value increases by 1 year:

2019 – minimum 10 years;
2020 – 11;
2021 – 12;
2022 – 13;
2023 – 14;
starting from 2024 – 15.

An increase in pension accruals is possible by increasing the size of the fixed payment for citizens who have accumulated special experience in difficult climatic conditions:

regions of the Far North – plus 50% to the base EF;
equalized territories – 30% of the base PV.

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.

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.

Flaws

Although the state promises an increase in pension benefits if people retire late, this option has negative aspects. The main one is the deterioration of already poor health, especially if a person works in hazardous industries. In addition, older people experience reduced productivity.

Low average life expectancy

If we take into account statistical data, based on which the average life expectancy in Russia is lower compared to European countries, retiring later than the established age is more advisable for women. According to official information, they live longer than men. In addition, women go on vacation five years earlier.

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Restrictions on pension recalculation

The increasing coefficient is due for each full year of delayed retirement. For example, if a citizen works for one and a half years, the rate established for 1 year will be applied to his pension. In addition, the maximum value has been determined - 10 years. This means that even after working for 15 years, he will not receive more than what is stipulated by law.

Cancel indexing

Citizens who decide to retire later are not granted a pension.

They will be able to count on indexation only when they become full pensioners.

For comparison: working pensioners also do not receive increased payments. But upon dismissal, the amount of pension benefits is revised upward, taking into account the indexations carried out in the country since the establishment of pensions.

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.

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:

Age of eligibility to receive insurance savings
2019	B + 1
2020	B + 2
2021	B + 3
2022	B + 4
2023 and beyond	B + 5
B – retirement age set until December 31, 2021.

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.