Many citizens may be very concerned about the question of how pension is accrued. What does it consist of and what are its species? What are the advantages and disadvantages of state pension funds and their non-state analogues. There are other equally important issues.
Every citizen has the right to rest, especially when it comes to retirement vacations. This means that work at some enterprise, which a person is engaged in his entire working life, should provide him with the rest of his life. This does not mean that the company must provide it itself, this is done through a pension fund, where each employer makes mandatory contributions. In the Russian Federation, the formation, accrual, and payment of pensions are subject to the mandatory observance of the law “On labor pensions in Russia”. If we talk about how the pension is accrued, it is worth mentioning that it can be not only mandatory, but it can be supplemented voluntarily, which indicates the possibility of using the savings that are placed in a non-state pension fund. The compulsory pension has several types, each of which can be named: labor disability pension, payments in case of loss of the breadwinner, as well as the classic old-age pension. A labor pension includes three components: basic, insurance, funded.
The basic part of the pension
Each organization and enterprise must make payments to the state compulsory insurance fund, about half of these funds are transferred to the pension fund. All these funds are not registered, that is, they are simply transferred to the fund, where they are used for current payments to existing pensioners. It is this part that is the basic part of the pension, the amount of which is determined depending on the cost of living, budgetary funds and inflation. The basic part is completely independent of the length of service, the amount of wages, it can be paid to foreigners and stateless persons who permanently reside in Russia.
How pension is accrued: insurance part
The insurance part differs significantly from the base in that it is tied to a specific person, and its size depends on the term of the expected payments, as well as on the amount of the accumulated contributions. Each employer makes mandatory contributions in the amount of 8-14% of the amount that is taxed for an individual employee, it is customary to include not only the salary itself, but also the rest of the funds spent by the enterprise on an individual employee.
How old-age pension is accrued: funded pension
The calculation of this part is carried out similarly to how the insurance part is calculated, but the pension capital in this case is replaced by the sum of the savings. These savings for each citizen are indicated in a special part of the personal account. A distinctive feature of the funded part is that it is placed on various investment instruments, it can be transferred to various funds for the implementation of management, and also with the possibility of investing in various instruments, including securities. Each working person can independently manage their funded part of the pension, which gives them the right to refuse or agree to cooperate with a particular management company or fund.
The benefits of using non-state funds are quite obvious. First of all, it is worth talking about the possibility of effective investment of funds, which will ensure effective growth of the pension. State funds choose for investment such instruments that are considered highly reliable, however, this negatively affects their profitability.
So, now it should be clear how the pension is calculated.