Russian law provides for the right of every citizen of the state, upon reaching a certain age, to receive the monthly pension payments established by legal standards.
The same procedure applies to individuals engaged in individual commercial activities.
However, there are fundamental differences in calculating pensions for individuals. First of all, they relate to the particulars of accruing pension points, establishing insurance experience and the formula itself for calculating the final amount.
Does IP affect retirement? If so, how?
The questions are very important and require detailed explanation. Let's start with the conditions for calculating pension payments.
Age framework
The main requirement for any citizen applying for a state pension is to reach a certain age threshold. In this case, an individual entrepreneur receives a pension in the same manner as an employee.
On June 14, 2018, the Government introduced a bill to the State Duma, according to which:
- The retirement age for men will increase from 60 to 65 by 2028.
- The retirement age for women will rise from 55 to 63 by 2034.
Total length of service
What is included in the length of service for retirement?
The total time during which a citizen, engaged in entrepreneurial activity, paid insurance premiums on a regular basis and in the manner prescribed by applicable law. This period should be at least 7 years.
There is also a separate requirement for seniority in the field of individual entrepreneurship, the value of which cannot be less than 9 years.
How can a person conducting private business confirm the size of his experience in the absence of a work book, which, as you know, does not start in this case?
Confirmation of work experience IP
To do this, you need the following set of documents:
- USRIP record sheet;
- document on registration in the general register of IP;
- confirmation of payments made to the pension fund;
- certificate of termination.
The first two documents until 2017 were replaced by a certificate of registration. But recently, the procedure for calculating pensions for individuals has undergone minor changes.
It would also be wise to provide all the documentation in some way related to doing business, for example, payroll and payment receipts. They will be an additional confirmation of experience.
In the case of the transition to private practice after hired work, it is necessary to present a work book. Since this document in any case remains the main one in the calculation of the total length of service.
But back to the main indicator that determines what kind of pension the individual will receive as a result.
Insurance experience and ways to increase it
As mentioned above, the insurance experience, on the basis of which the individual entrepreneur receives a pension, is determined based on the period of individual commercial activity, during which the citizen made regular insurance payments.
However, its size is subject to increase due to the following types of employment:
- Combining private practice with self-employment. This factor will be taken into account after the provision of a supporting document, which is an employment or civil law contract. If during this type of employment the employer made the full transfer of insurance premiums in respect of individual entrepreneurs, this period will also be included in the length of service for a pension.
- Care for a person recognized as disabled. If for some time the individual entrepreneur was not engaged in the main activity and hired work, but provided assistance to the disabled person, then this time period is still considered part of his seniority. In this case, the individual coefficient will be calculated in accordance with the special procedure provided for these cases.
- Maternity leave for up to one and a half years. The birth of a child and leave for this occasion during official employment is considered a circumstance that allows taking this period into account when determining the total length of service. This right is fully enjoyed by a person engaged in entrepreneurial activity.
If, upon reaching the retirement age, the requirements for insurance coverage are not fully met, the individual entrepreneur can use the right to receive old-age pension. Another condition for the emergence of the right to pension payments is the disability of the specified person, in which a separate category of payments is laid. For their receipt, the only prerequisite is the insurance experience from the first day of entrepreneurial activity.
Legal regulation
The procedure and features of calculating the pension of individual entrepreneurs are determined by the following regulatory acts:
- Article 18 FZ-166 - contains the rules for calculating old-age pensions;
- Chapter 4 FZ-400 - on its basis, the amount of insurance payments for different categories of citizens is calculated.
Calculation scheme
How to consider pension for an individual entrepreneur in Russia?
This type of mandatory payments in 2018 is calculated using the universal formula:
StrPens = PensB * StPensB + FixOff
Decoding:
Pensions - individual coefficient earned by a person for the entire period of employment; StPensB - the cost of one point when applying for a pension; FixOff - a fixed amount.
These indicators are determined by the current legislation providing for regular indexation depending on the general inflation rate. So on 01.01.2018, the cost of one calculated point, as well as the standard amount, was increased by 3.7% and as a result amounted to: StPensB - 81.49 rubles; FixOff - 4982.90 rubles.
The procedure for calculating pension points
Based on the amount of mandatory contributions paid by a person in accordance with the current pension insurance system, an individual coefficient is determined for calculating the pension payment.
If the entrepreneur combined the main activity with wage labor, then when determining this coefficient, the insurance payments of the individual entrepreneur as well as the mandatory contributions made by the employer, who actually acts as the policyholder for his employees, are taken into account.
To find out the amount of pension points received before 2015, the formula is applied:
IPK1 = PensCap / 228 months. / StPensKoeff,
where PensCap is the total pension capital (all insurance contributions made by a citizen during his employment up to 2015); StPensKoeff– individual coefficient equal to 64.1 rubles (constant value).
After 2015, retirement points are determined using another formula:
IPK2 = (YearDokhgod * 16/100) / (PrNalgod * 16/100) * 10,
where YearDohgod is the value of the employee’s total income, that is, his salary (for the entire reporting period); PrNalgod - the maximum permissible size of the tax base, relevant in the reporting period (since 2018 it is - 1,021,000 rubles).
The total coefficient is calculated by adding up all the points earned from the beginning of the working experience to the time the citizen applied to the FIU, that is:
IPCtotal = IPC1 + IPC2.
The new principle of payment of insurance premiums IP
Starting this year, the amount of compulsory insurance premiums for private entrepreneurs is no longer associated with the minimum wage. For it, a fixed value is calculated, calculated separately for each reporting period.
At the same time, the term for the transfer of additional contributions has undergone changes in the event that the entrepreneur has reached an annual income of 300 thousand rubles or more.
The size of the minimum insurance premiums IP
If we consider the total amount payable to the PFR and FFOMS in the next three years, then the final result will look like this:
- 2018: 32,385 rubles;
- 2019: 36,238 rubles;
- 2020: 40,874 rubles.
In other words, now every entrepreneur will be able to plan his budget in advance, having information about the required amount of upcoming mandatory payments to the FIU.
Previously, this value was calculated as a certain percentage of the minimum wage effective at the beginning of the period under review.
Can insurance premiums be increased?
The minimum fixed amount effective from 2018 is mandatory. It must be paid even in the case of zero income. Obligations to list it arise from the moment of registration of the IP.
When income for the reporting period exceeds the permissible maximum (300 thousand rubles), the additional charge will be 1% of the excess amount.
How is the maximum payment calculated?
The maximum allowable amount of insurance premiums is also determined without reference to the minimum wage. In 2018, the amount amounted to 212,360 rubles.
If the individual entrepreneur does not provide a tax return and a report on income received, then the maximum amount of insurance premiums may be requested from him, which is subject to further review after the presentation of the documents.
New deadline for contributions
Fixed contributions are paid, as before, until December 31 of the current year.
Meanwhile, the deadline for making an additional interest has been changed. If earlier it was April 1 of the next year, now it is July 1 of the current period.
Positive aspects of the new method
With this scheme for calculating insurance premiums, you can not track changes in the minimum wage. This positive point is especially relevant against the background of the often changing value of this indicator.
In addition, the establishment of a fixed value excludes the possibility of increasing mandatory payments following an increase in the minimum wage. Currently, such an innovation does not look very optimistic. Its positive impact will become apparent in the short term.
Important points when applying for a pension
In order to receive your first pension in a timely manner, one month before the retirement age, you must submit a specific application to the PFR branch. You should have a passport, a work book and archival documentation with you if you need additional confirmation of work experience. It is allowed to send this set of documents by registered letter with the application of the inventory. Pension benefits are accrued from the day all required documents are received.
An individual entrepreneur has the right to retire early. Such an opportunity is provided for situations related to the forced completion of entrepreneurial activity. However, this type of pension is available only if there is a certain length of service: men older than 58 years (of which 25 years of service) and women not younger than 53 years (20 years of service).
IP elimination process
To determine the length of service, the entrepreneur must provide documents confirming the completion of the activity, that is, the liquidation of the enterprise. It is very responsible to approach this event, considering all the important points.
First of all, all required contributions must be paid. Otherwise, a penalty of 5% of the outstanding amount will be charged if the delay is less than 6 months. An increase in the debt period entails the use of more serious sanctions, under which the penalty will increase to 30%.
The second serious stage is the appeal to the FIU no later than a month after the liquidation of the IP. For violation of this condition, a fine is also provided.
You should know it
The accrual of pensions is a complex, multi-level topic, fraught with many nuances and subtleties. Consider a number of points in order to better understand how to calculate the pension of IP.
Today (2018), the maximum value of the annual individual pension coefficient is 8.7. After 3 years, this figure is expected to rise to 10. In other words, for each reporting period with a maximum contribution, the pension is subject to increase. As a result, the pension for an individual entrepreneur can be up to 40 thousand rubles. Of course, this applies to persons making the maximum mandatory payments. It should be noted that such a level of transfers is possible for people with very large incomes (about 300 million a year), who may not need a pension.
As for the threshold value, with the current minimum amount of individual pension coefficients (13.8), it amounts to 5700 rubles. And this is much less than the social pension (old age) to which every entrepreneur has the right.
To summarize
It becomes obvious: despite the fact that all citizens should know the general procedure for calculating pension payments adopted in our country for individuals engaged in private commercial activities, this is especially true. This circumstance is due to many features and nuances that affect how an individual's pension is calculated. The main ones are presented here, but there are still many pitfalls that should be considered by any entrepreneur who wants to receive decent retirement benefits.