How the funded part of the pension is formed – calculation and increase, placement and management

The content of the article

• What is the funded part of the pension
• The funded pension law
• What year did it start
• The difference between the funded part of the pension and the insurance
• How is formed
• Calculation of funded pension
• How to find out the amount of savings
• Through the Internet
• In a pension fund
• Through employer
• Payment of the funded part of the pension
• Who can get
• When can I get
• How to get ahead of schedule
• Refund of the funded part of the pension
• Pension funded management
• What increases the funded pension
• How to choose a non-state pension fund for the funded part
• How to transfer the funded part of the pension
• How to use the funded part of the pension

Before the reform in Russia, there was a distribution pension system – contributions that employers deducted from the employee’s salary were sent to the RF PF, and from there to cover insurance payments of other citizens. After the reform, the pensioner is calculated the amount of insurance payments and the funded part of the pension is calculated separately, which directly depends on the amount of contributions paid from the salary.

What is the funded part of the pension

You can rely on old-age pension insurance benefits only if you have full work experience, otherwise citizens will receive the social benefits established by the state. What is a funded pension for the insured? With the reform of the insurance system, pensioners acquired the right to receive an increase in the amount of accruals (social or old age) due to the transfer of a part of the paid contributions to the individual accounts of employed persons.

The accumulated funds belong to a specific person, are not redirected to payments to other pensioners and will be guaranteed to be paid to the account holder upon reaching retirement age even in the absence of the required insurance period. The contributions of the employer, which are kept on the personal account of the citizen, are called – the funded part of the pension.

The funded pension law

Normative regulation is carried out by laws:

1. “On funded pension.” It was adopted on December 28, 2013; changes were made on 05/23/2016.
2. “On Amending Certain Legislative Acts of the Russian Federation on Compulsory Pension Insurance Issues Regarding the Right of Insurers to Choose the Pension Option” dated December 4, 2013.

What year did it start

The funded part of the retirement pension began to form after assigning a personal account number to all citizens. From 2002 to 2004, part of the contributions paid by the employer goes to the Accumulative Pension Fund and settles on the personal accounts of employed persons. Since 2016, the right to further accumulation is granted only to citizens born in 1967 and younger.

They were obliged to decide and declare a decision on the choice of the system of distribution of insurance premiums by the end of 2015. For those who have started their labor activity, the time for choosing the system of distribution of insurance premiums is 5 years or until the employee is 23 years old. For the silent people who did not write a statement, automatically all 22 percent of the contributions will be directed to insurance payments.

The difference between the funded part of the pension and the insurance

The disadvantage of the formation of savings is that for these funds there is no provision for indexing to inflation — the insurance part is indexed annually. There are positive differences in this type of payment:

1. The entire amount of savings is paid upon the occurrence of an insured event, even in the absence of a mandatory length of service.
2. Opportunity to receive income – increase the amount of the contributions paid by investing.
3. The right to inherit the funded pension of the deceased.

How is formed

The following sources are provided for by the legislation to form accumulation:

1. Mandatory pension contributions. They include funds concentrated on the personal account of employed persons for the period 2002-2004, as well as the distribution of contributions made by the employer after the pension reform of 2013. According to the adopted law, 16 percent are deducted for insurance payments. The tariff for financing funded payments is 6%. Since 2014, a moratorium on the formation of savings has been introduced: due to a shortage of funds in the state budget, the entire amount of the paid contributions goes to insurance payments. Frozen funded transfers extended for 2019.
2. Voluntary contributions are provided for all categories of citizens.
3. Funds of the Co-financing Pension Fund. From 2008 to November 5, 2015, persons who deposited money in the amount of 2,000 to 12,000 rubles to their personal accounts received a 2-fold increase in the amount of savings. For citizens who have reached retirement age and have not applied for calculating pension payments, the amount of money deposited increases four times.
4. Maternity capital funds can be replenished in the personal account if the insured person writes a statement.

Calculation of funded pension

From January 2015, approaches and the procedure for calculating pension payments are changing:

1. The method of calculating the insurance part is based on the accounting of annual pension points, the value of which depends on the level of earnings.
2. The previous concept of the base size in the calculation formula is replaced by a fixed indicator, which is approved by the government and represents the minimum level of pension payments guaranteed by the state with mandatory insurance experience.
3. An increase in the amount of pension accruals is possible due to the accumulation of the amount of insurance points and the application of the pension coefficient, which increases with increasing age of retirement.

Since that time, the funded part of the pension has been allocated as an independent form and is calculated separately. The listed contributions are recorded in monetary terms and are fully paid to citizens upon reaching retirement age or when assigning social benefits to beneficiaries. The size of monthly payments to citizens is determined by dividing the total amount of accumulated funds by the number of expected months of receipt of charges.

In 2019, the approved value is used for calculation – 240 (the survival time after retirement is considered to be 20 years). Upon reaching a well-deserved rest at an age older than established by law, the amount of payments increases due to a decrease in the number of months. After the appeal, all funds concentrated on the personal account are taken into account in the calculation:

• insurance and voluntary contributions;
• maternity capital funds;
• increase received in the framework of the co-financing program;
• income accrued on investing savings.

How to find out the amount of savings

If you have an agreement with NPF Sberbank, you can get information about the amount of savings on the organization’s website online. To do this, enter passport data and go to your personal account. To obtain information about the status of the account, you can use the services of a bank – a partner of an NPF. To do this, you must:

• present passport and personal account number;
• fill out an application;
• get an account statement.

Through the Internet

Information on the amount of savings can be obtained on the website of the FIU. To do this, in the personal account of the public services portal, you must

• pass registration: fill in the provided form;
• confirm registration using the received code;
• wait for access to the account;
• Log in
• activate the section Electronic services;
• select the Pension fund item;
• find out data of interest.

In a pension fund

Information on the status of a personal account can be obtained at the PF at the place of residence or at a non-state pension fund with which an agreement on investment of contributions has been concluded. To do this, you must:

• present to the employee a passport and insurance number;
• to write an application;
• wait 10-15 minutes and get a certificate of the amount of accumulated funds.

Through employer

How to find out the funded part of a pension to an employed citizen? Access to the data of the insured person is provided by the employer, who makes the deduction of contributions. It is necessary to apply for information to the accounting department of an enterprise and:

• present passport and personal account number;
• write or state an oral statement on the issuance of information;
• get an extract.

Payment of the funded part of the pension

After applying for payment to the insured person, monthly accruals will be calculated. To receive funds, several schemes are provided:

1. Lump sum payment. The issue of all accumulations is made in one amount.
2. Urgent. The duration of payments is determined by the account holder, but it cannot be less than 10 years.
3. Lifelong. Payments are made monthly.

Who can get

The right to receive accumulated funds is provided by law for categories of citizens who have simultaneously met the conditions:

• the insured persons were employed, and for them the employer from the salary transferred the insurance contributions to the pension fund;
• an insured event has occurred;
• at the time of applying for a pension, there is a balance in your personal account.

When can I get

The time for insured citizens to apply for accrual of accruals is not regulated by law, and the deadlines for receiving (assigning) payments are:

• next date after the day of application and package of documents.
• the date following the day of dismissal, if the application is written within 30 days after the termination of employment with the employer.

How to get ahead of schedule

Before reaching the insurance age, early retirement pension can be issued on the occasion of disability. Early receipt is possible upon the death of the insured person. The assignees can receive accumulations of the deceased – persons indicated in the application to the Pension Fund. In the absence of such a document, the heirs – close relatives, have the right to receive if they file an application within 6 months from the date of death.

Refund of the funded part of the pension

Who can receive the funded part of the pension at a time according to the law? Such payments are provided for:

1. For persons receiving disability insurance benefits, loss of breadwinner or social security benefits (who, upon reaching retirement age, do not have enough work experience or pension points)
2. For citizens for whom the calculated amount of accumulative charges is 5% or less of the size of labor payments.

Pension funded management

According to the legislation, the insured person has the right to independently manage the savings. If you decide to create savings, you must write a statement to the FIU and choose one of the options:

• a management company (UK) having an agreement with the PF;
• investment portfolio of the state management company (GUK) – Vnesheconombank;
• private pension fund (NPF).

What increases the funded pension

During the course of employment, the size of the pension accumulation of the insured person may exceed the amount of the transferred funds due to the investment provided by law. Contributions are used by companies to finance the economy – placed in government bonds or shares of Russian enterprises and bring profit to their owners.

How to choose a non-state pension fund for the funded part

When choosing one of the options: UK or GUK, the insured person remains registered with the Pension Fund, and the selected company gains the right to manage the stock market savings. A high percentage of profit can be obtained by concluding an agreement with a private pension fund. With this investment option, the accounting of the contributions and investment income is kept by the management company NPF. The following factors may testify in favor of choosing a company:

• significant duration of its activities;
• a large number of insured persons choosing a company;
• stable financial performance;
• positive customer reviews;
• first positions in the ranking according to independent agencies.

How to transfer the funded part of the pension

The insured person has the opportunity to transfer from one fund to another. When deciding to transfer to a non-state pension fund or management company, it is necessary to visit the office of the selected company with a passport and SNILS card, conclude an agreement, and then write a statement on the transfer of savings funds to the Pension Fund. In the case of a transition to the GUK, you must submit applications to the PF. The decision on the transfer is made next year until March 31.

Insured persons may take advantage of the transfer opportunity annually. Without loss, you can request a transfer of funds once every five years. Management companies reserve the right not to pay income if such a rule is violated. In the case when the money is transferred in a loss-making period for the company, you can get savings in the amount less than the face value.

How to use the funded part of the pension

According to the legislation, the insured person is provided with three options for using contributions:

1. Refuse savings contributions to increase insurance premiums. With this method, the amount of pension points will increase. Only in the case of compulsory seniority upon reaching retirement age can we hope to increase the total amount of insurance accrual.
2. Generate savings, use them for investment through private pension funds – this is how the state provides an opportunity for insured persons to make a profit not with their own free funds, but from mandatory contributions. Sometimes the return on such investments exceeds interest rates on bank deposits.
3. Invest funds with the participation of the GUK or the Criminal Code. If there is a lack of confidence in non-state structures, it is possible to use the services of companies whose activities are strictly controlled by the state. Profitability on such placement is lower than when investing through NPFs. Often, the percentage of profit on such investments equals the inflation rate.

For citizens deciding how to manage funded contributions, you need to consider the following nuances:

1. The right to transfer to the formation of funded payments is granted once.
2. The time and number of transitions to accrual only the insurance part is not regulated.