Are there any differences between labor and insurance pensions?

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Labor legislation is constantly changing, so even specialists do not always have time to keep up with changes regarding the concepts of insurance and labor pensions. Ordinary citizens have even more questions. This information is useful even for young people - it will be easier to decide what compensation they can count on after finishing their working career.

In the article we will discuss how an insurance pension differs from a labor pension.

Labor

The term insurance pension payment has almost completely replaced this concept at the present time. This is the amount of money that is paid to citizens when they become unable to work. For example, due to age or other problems, situations specified in the law.

There are the following varieties:

1. For the loss of a breadwinner. Paid to close family members if they are recognized as dependents and the insured person dies. The main thing is to prove non-involvement in the death. Until reaching the age of majority or the age of 23, benefits are paid to children who have lost both parents or one.
2. Due to disability. Paid to those who received one of the three groups. The insurance period often determines what the amount of compensation will be. Moreover, its duration for accounting can be only 1 day. Social types of payments are provided for citizens who have no experience at all.
3. Due to old age. The main requirements are at least 15 years of insurance experience and a certain age limit.

Attention! It is necessary to contact the territorial body of the Pension Fund in order to be assigned one of the compensations described above. The appeal is considered within a maximum of 10 days.

Required attachments to the application:

• Passport.
• Employment history.
• Evidence that there is every reason for payment.

Previously, the funded and insurance parts of the pension were allocated, each of which had its own calculation rules. Now the state has allocated two independent payments for almost the same reasons.

What happened to the labor pension?

Since 2002, pension reform has been taking place in Russia.
Until January 1, 2015, the Law “On Labor Pensions in the Russian Federation” No. 144-FZ of December 17, 2001 was in force. According to its provisions, an employee applied for cash payments in old age when he reached the required age and had at least 5 years of experience. After January 1, 2015, the concept of “labor pension” is absent in the legislation. Instead of one law, there are two: “On insurance pensions” and “On funded pensions”. That is, the previous labor pension was divided into insurance and funded, which a person can claim at the same time . Let's take a closer look.

Insurance structure

An insurance pension is a guarantee of income to replace the opportunity that was lost. In the event of the death of the insured person, close relatives receive such compensation. The source of payments is employer contributions for each employee in the amount of 22% of income. 16% of them go specifically to the insurance pension.

Payments are made every month with the participation of the bank or post offices. You can issue a power of attorney to a third party if the citizen is not able to receive compensation on his own. Money is transferred to parents or guardians if the recipient is a child under 14 years of age.

The scope of work experience includes the following time periods:

1. Staying registered with the employment service. Or the time during which social benefits were paid. Participation in the public and political life of the state is subject to the same rules.
2. Stay in places of detention.
3. Maternity and childcare leave.
4. Service in troops of any kind.
5. Period of study in various institutions.

In the event of the loss of a breadwinner, a pension is issued to immediate relatives who are recognized as disabled.

When making payments to disabled people, it does not matter for what reason this or that group is assigned.

Reference! In any case, a person’s insurance experience remains a prerequisite, no matter what kind of activity we are talking about. The main thing is that it is official. It is necessary to provide extracts from the inspection reports. To do this, they turn to the medical and social examination bodies.

A citizen is not required to retire immediately after reaching the appropriate age. Previously, working retirees had much more benefits compared to those who decided to leave their jobs. Currently, a significant part of the benefits has been cancelled.

Working pensioners can now count on several types of payments:

• Insurance pensions. Paid if there are insurance contributions from the former manager.
• A pension for which the state is the source of security. We are talking about social benefits and payments intended for government and military personnel.

To calculate the final amount of benefits for a working pensioner, special formulas are provided. This is a multiplication between the individual pension coefficient and the legally established amount of points.

Every year the amount is recalculated depending on the added insurance contributions from the employer.

Recently they suspended the indexation of payments for those citizens who continue to work although they have reached the specified age. This is due to state budgets and the funds in them.

Types of insurance pensions

Most citizens form a future insurance pension throughout their entire working life and receive it subject to certain conditions. Federal law distinguishes several types of insurance pensions.

By old age

Material support is received by citizens who have lost their ability to work due to reaching old age , in other words, upon the onset of old age. To exercise the right to this type of pension, you must reach a certain required age prescribed by law.

For the loss of a breadwinner

Disabled persons who are related to the breadwinner (for example, minor dependents) can apply for a Dependents are citizens who were fully supported by the breadwinner or who received payments from him, which were the main source of income.

By disability

People with disabilities receive a disability insurance pension upon presentation of official documents confirming their respective status.

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The cause of disability and the amount of work experience accumulated do not matter when assigning benefits. However, in the absence of any length of service, a state benefit is assigned, the amount of which is regulated by another law.

Fixed or basic payment

Now it is called a fixed supplement to the insurance pension. It is adjusted annually, since the inflation rate is taken into account.

There are additional factors that influence the amount of such compensation:

1. The number of dependent citizens who have lost their ability to work.
2. Pensioner's age.
3. Type of benefits paid.
4. Disability group.
5. Work experience with difficult and harmful conditions.

If the conditions for granting a pension are violated, payment may be suspended. The same applies to the situation with documents whose validity period expires. It is permissible to restore payments if the citizen corrects existing shortcomings in a timely manner. You just need to clarify in advance what and how is formalized in this case. Specialists will conduct a consultation and tell you how to behave.

What is a fixed payment and indexation coefficient?

In addition to the above indicators, the old-age insurance pension includes a fixed payment, which the state constantly indexes. As of February 1, 2021, it is 4,805.11 rubles.

If a person applies for old-age benefits not upon reaching the required age, but later, an increasing coefficient is applied. For example, 3 years after age 60 for men and 55 for women, their pension points will be multiplied by a factor of 1.24, and the fixed benefit will be multiplied by a factor of 1.19. For comparison, if the application occurs 10 or more years after the permitted period, the increasing coefficient for the IPC and the fixed payment will be 2.32 and 2.11, respectively.

Important! Detailed information on the size of increasing coefficients and fixed payments, the cost of the IPC, as well as a calculation calculator are presented on the website of the Pension Fund of the Russian Federation.

What is the difference between a labor pension and an insurance pension?

For a variety of reasons, a person may lack a work history - for example, due to injury or loss of ability to work, but this does not at all deprive him of the prospect of receiving a guaranteed pension. Rather, on the contrary, disabled people, orphans, and elderly people can without mistake be classified as the most vulnerable category of the population, which requires special participation. Special social pensions are designed for them - this is monetary assistance from the state intended for disabled people who have not had time to earn the required length of service.

We recommend reading: Labor Code norms of definition

The basis for establishing and calculating length of service is the employment contract concluded between the employee and the employer, according to which labor or social activities are carried out. Typically, this length of service includes the period that the citizen officially worked, but there are exceptions. So, if the state recognizes the reasons why a person did not work during a certain period as valid, then this time will be added to the total length of service.

Dimensions

To reduce the consequences of inflation, government payments are subject to mandatory indexation - this calculation is carried out annually on April 1. At the same time, if the final amount of the social disability pension (and other indicators) is less than the established minimum subsistence level for a given region, then the recipient is also assigned special additional payments.

The basic size of the social pension (that is, without bonuses and coefficients) directly depends on the category to which the recipient belongs, and there is a significant spread. According to the situation as of April 2017, the range starts from 4279.14 rubles - this is a benefit for disabled people of group 3, and the largest amount of accrual is 12082.06 rubles.

The employer pays a monthly contribution of 22% of the employee's salary to ensure his future pension. This money can be used to create:

• exclusively, the insurance part of the pension;
• insurance (16%) and funded (6%) pensions simultaneously.

An insurance pension is assigned for several reasons, one of which is that citizens reach a working age. As a general rule, it is 60 years for men and 55 years for women. Old-age insurance benefits are what most Russian pensioners receive today. Its size now depends on:

• the amount of insurance coverage of the employee;
• the number of points accrued (in other words, individual pension coefficients - IPC);
• application period.

For each year of insurance service, the employee is awarded IPC points. Their number depends on the size of contributions transferred to the Pension Fund. In order to receive a pension in 2021, the number of IPCs must be 11.4. Every year the requirements will increase, and from 2025 the minimum required number of points will be 30.

The state constantly indexes the cost of one IPC. From April 1, 2021, one point is equal to 78.58 rubles. To calculate the size of the future payment, the number of accumulated IPCs must be multiplied by the cost of one point in the year when the citizen is awarded a pension.

To receive it, a person must have work experience established by law. In this case, it will be possible to consider receiving a specific payment.

According to the age

After the latest pension reform, in order to retire and receive a labor pension in the current year 2018, the following conditions must be met:

• reaching 55 or 60 years of age (women and men, respectively);
• accumulation of experience throughout life, taking into account all periods that also count towards work experience, at least 9 years;
• accumulation of 13.8 points, which are calculated based on deductions that were sent from each salary to the Pension Fund.

The labor type of this benefit will be assigned if the breadwinner had at least one full day of work experience. In this case, the number of years worked and the amount of accumulated points will not matter. This provision is understood as compensation to the dependents of a deceased person for those pension payments that the breadwinner himself did not receive.

Only disabled citizens who were close relatives of the deceased person can count on receiving such a pension.

By disability

To apply for this type of payment, it is important that the person has at least some experience. A disabled person could receive it before he received a certain disability group, or, having a certain group, he can find a job and work within the limits of his limited working capacity.

Payments are assigned as follows:

1. If by 2021 a citizen with a disability has completed the required 9 years of service and has the required amount of contributions, then he will be assigned a pension before he reaches retirement age.
2. If he does not fit the new conditions of the program, then he will switch to receiving social benefits after he reaches retirement age.

In order to be assigned an old-age insurance pension, a number of conditions must be met:

• developing a certain amount of work experience (in the future, at least 15 years);
• minimum pension points (calculated every year of employment).

At the end of the transition period due to the introduction of the new pension system, the minimum number of points required to assign a pension (insurance) will be 30. As you can see, the requirements are quite serious, so every year it is becoming more and more difficult for citizens of the Russian Federation to meet them.

Suspension and termination of pension payments

Disability payments are terminated if the disabled person has not passed the next examination. After medical examination and receipt of a medical examination confirming the disability group, upon application, transfers are resumed.

The suspension of payments is regulated by Federal Law 400 Art. 25 when:

• They don’t receive money for six months, then payments will be stopped for the 7th month;
• the foreign citizen has not extended his period of permanent residence in Russia;
• the recipient of the pension has moved for permanent residence to another state and has not confirmed that he has the right to old-age benefits in this country.

When a pensioner dies, then in the month following death, the flow of funds will stop.

If a citizen retains the right to receive state financial support, it is enough to re-submit an application to the Pension Fund, provide a medical examination or other evidentiary documents that were not available and therefore payments were suspended.

Insurance part upon early retirement

The legislator has developed a list of workers who have the right to early retirement in connection with the performance of labor functions under special conditions. Such employees include:

• Workers in the field of education (teachers);
• Medical workers;
• Persons working in difficult climatic conditions (in the North or in similar areas) for at least 15 years;
• Citizens fulfilling labor obligations when exposed to harmful and dangerous production factors.

In addition to the above categories of citizens, the following have the right to early retirement: persons raising disabled children; citizens who were injured and registered as disabled as a result of participation in hostilities or armed conflicts.

The amount of the insurance pension for the above categories of persons is calculated in the general manner, according to the formula discussed earlier. The size of this payment depends on the citizen’s earnings, as well as on the monthly amount of insurance contributions paid by the employer to the Pension Fund of the Russian Federation.

How to increase your pension

Some leaders advise moving to a region where they pay more money than in your current place of residence. It is worth noting that in the North, costs are increased compared to Kuban, where you can grow vegetables and fruits yourself or buy them cheaply on the market. The monetary allowance will increase if you simply do not apply for state support, continue to work, and wait until the IPC accumulates.

Since 2015, the calculation of pension points includes non-insurance periods when the pensioner:

• cared for children or an elderly relative;
• was with a military spouse where there was no work;
• worked in military or equivalent service.

Each such period provides an opportunity to significantly increase the IPC and the pension provision itself.

Topic: Labor and insurance experience

General work experience and insurance experience are different legal concepts. The list of periods of labor and other socially useful activities included in the total length of service is set out in paragraph 4 of Article 30 of the Federal Law “On Labor Pensions in the Russian Federation” dated December 17, 2001 No. 173-FZ. This type of experience is taken into account on a calendar basis (day by day). The fundamental difference between general work experience and insurance experience is that each of them has a different purpose. Thus, the total length of service was calculated for pension purposes. It was calculated only until January 1, 2002. Paragraph 4 of Article 30 of the Federal Law “On Labor Pensions in the Russian Federation” dated December 17, 2001 No. 173-FZ specifically emphasizes that the total length of service was calculated until January 1, 2002. Accordingly, The insurance period is calculated from this date.

It must be borne in mind that INSURANCE EXPERIENCE has two types: 1. FOR PENSION SECURITY PURPOSES (it began to be calculated from January 1, 2002). The procedure for calculating this type of insurance experience is set out in Decree of the Government of the Russian Federation dated July 24, 2002 No. 555. This type of experience is calculated on a calendar basis based on a full year (12 months). In this case, every 30 days of these periods are converted into months, and every 12 months of these periods are converted into full years. 2. FOR THE PURPOSES OF ASSIGNING TEMPORARY DISABILITY BENEFITS. The procedure for calculating this type of length of service is determined by order of the Ministry of Health and Social Development of Russia dated February 6, 2007 No. 91. According to Article 10 of the Federal Law of December 17, 2001 No. 173-FZ “On Labor Pensions in the Russian Federation”, periods of work and (or ) other activities that were carried out on the territory of the Russian Federation, provided that during these periods insurance contributions were paid to the Pension Fund of the Russian Federation. Mechanism for calculating insurance experience. The date of hire and date of dismissal are counted towards the pay period. The insurance period is calculated on a calendar basis based on full months (30 days) and a full year (12 months). In this case, every 30 days of these periods are converted into full months, and every 12 months of these periods are converted into full years. Please note that in the case specified in Article 17 of Federal Law No. 255-FZ of December 29, 2006, the continuous length of service for sick leave payment continues to be calculated. As for the insurance length of service for assigning a pension, it is not established by a personal card or even by a work book, so this type of length of service need not be calculated: this should be done by the Pension Fund of the Russian Federation. It is inappropriate to calculate information about the total length of service, if only for the reason that this information for each citizen was already submitted to the Pension Fund of the Russian Federation several years ago. It is the Pension Fund of Russia that is currently taking into account the length of service.

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Is it possible to transfer pensions between each other?

A transfer from social to insurance is possible if a person has earned seniority and the time has come due to age to retire.

Application procedure. The Pension Fund of the Russian Federation shall attach to the application:

• identification;
• SNILS;
• an extract from the work record book confirming that the length of service is sufficient for insurance payments.

When you are assigned an insurance pension, or as it was previously called a labor pension, you can continue to work and receive pension benefits without additional increases.

Attention! Every year the state began to index provision for the older generation, focusing on the level of inflation. At the same time, the increase in funds occurs differently in each region, depending on the minimum wage and the cost of living.

Law on Social Pensions

The basic provisions on the issue of interest to us are set out in the Federal Law on social pensions; it determines who has the right to such benefits and regulates their amount. The law also speaks about the time interval in which such transfers will be made - for example, in the event of the loss of parents, this is the period until the child reaches the age of majority, and if he receives a full-time education at an institute or university, then until the age of 23. There is also an indefinite (lifelong) establishment of transfers.

This type of pension is granted only if the applicant meets three important criteria:

• in most cases, a pension can be received by a citizen who has lived to the number of years established by the state. For the fair half of humanity this is fifty-five years, for the stronger sex - sixty, but for some groups of the population the legislation requires earlier retirement in old age;
• if you retire in two thousand and eighteen, your service must be at least nine years. This period is slowly changing upward. So, in two thousand and seventeen, the minimum working period was eight years, but every twelve months 1 year is added to this period. This will continue until the minimum possible working experience reaches fifteen years. This will happen in 2024;
• In addition to experience, you should accumulate a sufficient number of points throughout your life. In two thousand and fifteen, only 6 points were needed, but every year this number increases. In two thousand and twenty-four, the future pensioner must earn at least 30 points.

In Russia, there is another type of pension – funded. It is formed from the insurance premiums that the citizen (or employer) paid, as well as income from investment.

A citizen can decide for himself to give preference exclusively to insurance pension payments or to both insurance and funded ones. But the choice is allowed for five years from the date of transfer of the initial insurance payment.

Please note that the insurance pension is guaranteed by the state and is indexed every year. While a funded pension is an investment. And your benefit depends entirely on the success of the investments of the pension organization you choose. Therefore, you can make both profit and loss.

How to apply?

How to calculate the amount of pension payments

The calculation formula has remained the same as it was before the reforms, the basis of which is the system for determining points, for whatever occasion a person is assigned content, be it:

• old age;
• disability;
• loss of a breadwinner.

Pension provision remains dependent on the following values:

• fixed payments;
• pension coefficients;
• points earned (IPC).

The state indexes the fixed size and cost of coefficients whenever possible. Promotions take place in January. This procedure applies to non-working pensioners; pension points are recalculated in August. If, according to calculations, the amount of pension provision turns out to be less than the region's PMP, there will be an additional surcharge, where social assistance will equalize the basic amount with the minimum subsistence level.

Using the formula, you can calculate any type of pension:

Rp = Pk x Ipk + Fv, where

Rp – pension amount

Pk – is the pension coefficient

Ipk – points accumulated by the employee

Fv – fixed payment

Pension coefficients increase in direct proportion to the insurance contributions paid by employers. The IPC depends on work experience and salary level. The higher these parameters are, the more mandatory transfers were made.

There are calculators for calculating pensions on the Pension Fund website. To do this, you need to register a personal account, where every working citizen will find out his individual industrial complex, the difference between transfers from the state budget and from the Pension Fund. A point in 2021 costs 98.86, the remaining parameters are entered in the calculator, and following the formula, sequential actions are performed.

It should be noted that the amount of fixed payments is established and indexed by the state; this part is basic or basic and independent of work experience. The only differences are in years.

So, what is the difference between insurance and social pensions? State provision does not require length of service or contributions, so there are no points earned.

A little about pension savings

In addition to forming the insurance part of the pension, working people can make pension savings. In 2021, this right is available to those who submitted the necessary application to the Pension Fund before December 31, 2015, as well as those starting their labor activity for the first time.

These savings are formed from deductions from the employee’s salary (in the amount of 6%). The total amount at the time of the employee's retirement will consist of collected funds and investment income. The monthly benefit amount is calculated on the basis that payments will be made over a period of 20 years.

Structure of labor pensions: insurance and funded parts of the labor pension

In the event of loss of a pension, it is established in a fixed amount, which is determined depending on the type of pension, the age of the pensioner, the established degree of limitation of the ability to work (inv-ti group) and the presence of disabled family members of the pensioner.

person (which are assessed on the basis of the pension rights accumulated by the citizen in connection with the payment of insurance payments by employers for this person to the Pension Fund of the Russian Federation) and is established in a differentiated amount. The basis for calculating the insurance part of the insurance policy is the estimated pension capital of the insured person, the value of which is formed from the total amount of insurance contributions received by the Pension Fund of the Russian Federation for a specific insured person, and the pension rights of the insured person acquired before the entry into force of the Law on Labor Pensions (up to 1 January 2002), expressed in monetary terms.