• • 1.In what areas should we expect innovation?
  • 2.Features of the storage system
  • 3.Creation of an additional reserve fund
  • 4.Promotion retirement age
  • 5. Calculation of pensions for civil servants

For several years now, the question of the need for reform has been brewing pension system in Russia, today the Ministry of Finance, together with the Ministry of Economic Development, have prepared a number of amendments and will present a finished bill by the end of the year. Among the most controversial issues is the increase in the retirement age; we will consider what other changes may occur in more detail.

In what areas should we expect innovation?

Since the full package of changes is in the process of preparation, it is difficult to say with certainty which areas the changes will affect, we only know that it is planned to consider issues about:

• raising the retirement age bar;
• creating an additional reserve fund;
• the procedure for calculating pensions for civil servants;
• reforming the pension savings system.

What changes will be paramount and what is planned to be done in the next few years is not yet fully known, but by the end of the year the government has promised to present a full action plan for everyone to see.

Features of the storage system

The possibility of accumulating one’s own pension, which only recently seemed illusory, is becoming closer; by the end of 2017, every Russian will be able to familiarize himself with the system of accumulation of funds and the main provisions of this law. The Ministry of Finance, with the support of the Central Bank, is at this stage actively working to study the possibilities of circulation of funds and their savings; as soon as all the nuances are resolved, the law will immediately come into force.

As reported on the 1Fin.Biz website, the main changes in the accumulation mechanism will concern additional opportunities for working citizens to influence the level of their future pension by accumulating funds, the size of the pension will increase annually. Those who ignore the initiative will have to be content with standard pension payments established by the state.

Also, according to the head of the Ministry of Finance, Anton Siluanov, the savings mechanism will be:

• Completely voluntary.
• It will become more accessible.
• Reliably protected by the state.
• The right to inherit accumulated funds will appear.
• The accumulated funds can be withdrawn (subject to certain restrictions, if necessary).

On this moment The accumulative mechanism in Russia has been suspended; as soon as new provisions are adopted, the law will come into force again.

Creation of an additional reserve fund

The decree on reforming the savings system that guarantees payments to insured citizens was signed by the president a long time ago, and early this year specialists are working on creating a two-tier system. This system will be based on guaranteed mandatory pension payments, and an additional state reserve fund will be created.

Judging by how global changes are coming to the pension system, the changes will also affect a number of other provisions relating to pension payments.

Raising the retirement age

There is no doubt that the retirement threshold will be increased, but it is not yet clear how the transition will be carried out. Opponents and supporters of this decision are still at the stage of discussing an increase in the retirement age, some propose to gradually increase the age threshold, and some think so. That there is no point in delaying the decision.

One way or another, other details of the upcoming reform are kept secret for now.

Calculation of pensions for civil servants

Innovations are also planned in this area; now every official will receive an additional bonus for overtime over the specified retirement age. Civil servants will be able to occupy their positions longer, and at the same time receive additional benefits from processing.

What other surprises the pension reform is preparing will become clear at the end of 2017.

The issue of pension provision in Ukraine has remained the most important for many years, requiring an effective and competent solution. For a long time, there have been heated discussions among officials and parliamentarians about how to reform the pension system.

As a result, the Law “On Amendments to Certain Legislative Acts of Ukraine Regarding the Increase of Pensions”, having gone through a long journey of approvals, clarifications, and adjustments, was adopted by deputies of the Verkhovna Rada of Ukraine on October 3, 2017. This article outlines the main theses, changes and principles for calculating pensions for different categories of citizens in the light of new legislative innovations. What their essence is will be discussed below.

Today, plans to change the pension system are becoming a reality. Thanks to adopted Law, already in October last year the procedure for modernizing pensions began, which will be followed by other norms prescribed in the document. The adoption of this important document is serious step on the path to reforming both the pension system and the social security sector as a whole.

The population of Ukraine, in particular pensioners and those who are about to cross the border of retirement age, are trying to understand what to expect from the pension reform, what is the essence of the changes, what are the state’s plans in this regard and in what time frame should innovations be expected. This article will help you understand the complexities of pension reforms, which contains information from official sources, the opinions of analysts and answers to the most “hot” questions.

What is the essence of pension reform in Ukraine

So, in 2017, the first stage of pension reform started in Ukraine, which was repeatedly announced both at the government level and in the media. Earlier versions of the pension reform turned out to be unviable; despite all their ambitions, they did not bring the expected increase in the level of pensions and did not guarantee a secure old age for Ukrainian citizens.

New steps towards reform were the result of Ukraine’s partnership with the IMF (International Monetary Fund), with which a Memorandum of Cooperation was concluded. In accordance with the adopted document, the Government of Ukraine must take a number of significant steps to reform the pension system, developing an appropriate legislative framework and preparing the conditions for administration. As is known, pension provision is an indicator of the well-being of society and the economic stability of the state.

It was these conditions that contributed to the development and adoption of amendments to the Law on Pensions, for which the people’s representatives voted on October 3, 2017.

In the field social policy the state is obliged to take care of its citizens who have reached old age or who have lost the ability to continue working. This concern should consist of regular payment of pensions, the amount of which provides for the basic needs of the elderly. We’ll talk about how things really are a little later, but for now let’s move on to the essence of the pension reform.

The reform consists of the introduction of a three-level pension provision, which to this day consists of a solidarity system and funded pension. If the first part of the pension system works in the country at the very least, funded pensions practically remain an unrealized sector.

The Government of Ukraine plans to launch a joint pension mechanism in combination with voluntary pension insurance, which should become an integral part of the entire pension system in the country:

• solidarity system
• general accumulative
• voluntary non-state funded

Pension reform news

The plans of the Cabinet of Ministers and relevant ministries include reducing the PFC deficit, which amounts to more than UAH 145 billion. This gap between revenue and expenditure is covered by funds from the State Budget of Ukraine.

The average size of pensions will increase and this will also lead to an increase in the expenditure side of the PFU budget. Thus, with increased expenditures, the reduction in the PFC deficit can be perceived as a significant step to correct the situation in pension provision.

Article 26 of the Law of Ukraine “On General State Pension Insurance”, in accordance with the adopted amendments, now regulates the retirement age of 60 years, if any insurance period at least 15 years (see table).

Right to early exit women born in 1961 and older who have required amount years of insurance experience.

If an insured person aged 63 years after January 1, 2018 does not have an insurance period, but has one for the previous period, then the pension is assigned according to this scheme.

At the age of 65, persons who have, as of January 1, 2019, the number of years of insurance experience indicated in the table below, can retire.

Starting from October 1, 2017, pensions are being significantly modernized, and working pensioners are given the right to receive pensions in full. Amendments to the Law cancel the previously adopted ban on the payment of pensions to working pensioners until December 31, 2017. Since October 1 last year, pensioners, including military pensioners, have received pensions and salaries in full.

What is the point of modernizing pensions:

• A single indicator of the average salary used when assigning a pension at the level of 3764.4 UAH
• The cost of the insurance period indicator is 1%
• The insurance period for women is 30 years, for men - 35 years.
• On transition period for new pensions, the cost of a year of insurance experience will remain 1.35%.
• In 2018, when calculating pensions, the cost of a year of service will be used at 1%.
• To improve the calculation of pensions, it is planned to automatically recalculate them.

If the insured person has 30 years of experience (women) and 35 years (men), then a pension is provided at the subsistence level. Pensions will be indexed annually: in 2019-2020 - by decision of the Cabinet of Ministers of Ukraine, starting in 2021 - taking into account the consumer price index.

The maximum monthly insurance payment should not exceed 10 subsistence minimums for able-bodied citizens. The same norm is provided for insurance payments to persons who have lost their breadwinner.

Special pensions are canceled for:

• Civil servants
• Scientific figures
• Local government officials
• Prosecutors
• Deputies
• Journalists

Pensions that were assigned in more than early dates, remain the same. If there is insufficient insurance experience, it is possible to “purchase” it with a coefficient of 2 - up to 12 months and with a coefficient of 1.5 - up to 24 months.

Amendments to the Pension Law also provide for a number of mechanisms for improving pension accruals and payments. This also applies to the possibility of automatic recalculation without contacting the Pension Fund, and simplification of verification of salary documents and other procedural issues.

Types of pensions

Pensions are divided into four types:

• upon reaching a certain age
• upon receipt of disability
• in case of loss (absence) of a breadwinner
• military pensions

Pensions assigned upon reaching a certain age will be administered by the Pension Fund; the Fund will accumulate funds and pay pensions.

Disability pensions will be paid by the Social Insurance Fund. Survivor pensions will also be financed by the Social Insurance Fund of Ukraine.

Long service pensions will remain only for military personnel with at least 25 years of service. The length of service will be fixed, but contributions paid from the wage fund will be transferred in double amount. According to the Minister of Social Policy, pension payments to military personnel under 60 years of age will be made at the expense of the State Budget, and for those over 60 years of age - at the expense of the Pension Fund.

In connection with the increase in the retirement age in Ukraine, it is worth noting that our country, even after raising the retirement age, remains one of the lowest in Europe. For example, in a number of countries the retirement age is 60-65 years for both men and women, and in Sweden there is discussion about raising the retirement age to 75 years.

Of course, it is not entirely correct to compare the social security of a fairly prosperous Sweden and Ukraine, which is just building its national economy. But the gradual transition to European social and living standards is a necessary condition development of our society at a new qualitative level.

Goals of pension reform

Pension reform, in addition to the fact that it is conditioned by the requirements of the Memorandum with the IMF, it carries a mechanism for the progressive development of social security in Ukraine. Experts agree that pension reform will bring a number of positive results, namely:

• Ensures reliability and stability of pension payments
• Optimizes the mechanism for managing funds received by the financial institution
• Encourages Ukrainians to refuse salaries in envelopes in order to secure an old-age pension with their contributions
• Increases citizens' awareness of caring about their future
• It will increase the standard of living of pensioners, which is the most important goal of pension reform.

Taking care of your pension

One of the goals of reform is to develop in every citizen a sense of responsibility for their future. Shifting responsibility to the state, hoping that it will take care of a person in old age, is somewhat irresponsible. Unfortunately, our state is not yet able to provide decent financial support for older people.

In a country where the economy has been undermined by military operations in the east of the country, as well as oligarchic and political strife, it is, to put it mildly, unreasonable to abdicate responsibility for one’s own well-being. In the words of a classic, “saving drowning people is the work of the drowning people themselves.” This idea is indirectly contained in the third component of the pension system - voluntary pension insurance.

For reference: today there are 12 million pensioners in Ukraine, who account for 10 million working citizens. Contributions in the form of unified social contribution, which is withheld from the wage fund, are a source of revenue for the PFU budget. It becomes obvious that leaving the “shadow” of wage payments will help increase the volume of revenues to the financial institutions.

Last year, the size of the single social contribution was significantly reduced. The government hoped in this way to eliminate the pension fund budget deficit by increasing the influx of funding. Unfortunately, this did not happen, and the PFU budget deficit increased even more.

Pension reform for pensioners

It is expected that reforming the pension system will bring stability and increased pensions to pensioners.

Pension reform for workers

For working citizens, the pension system will bring a clear understanding of what to expect when reaching retirement age, at what age it will occur, depending on the year of birth. Pension reform will also enable working citizens to actively participate in voluntary pension insurance in order to prepare for retirement and ensure a prosperous old age.

On the part of the state, workers who are considered as potential pensioners should expect further steps to implement pension reform, improve the administration of financial flows and encourage employers to make regular contributions to the pension fund.

Classmates

COMMENTS:

Due to changes in the late 80s and early 90s of the 20th century in Russian state system In accordance with the principles of a market economy, there was a need to reform the pension system in force in the USSR. The old system assumed pension provision from the state budget, but in the new realities such a system no longer corresponded to the conditions of a market economy. As a result, the state developed a large-scale plan for the gradual reform of the pension system until 2025.

What are the main stages of system reform? What important changes occurred at the beginning of 2015? What changes took place in 2017? We will answer these questions in this article.

Main stages of reform

In the 1990s and early 2000s, a number of laws were adopted aimed at creating a system of compulsory pension insurance. The formation of the modern Russian pension insurance system had several serious stages:

• The first stage began with the adoption of the law “On State Pensions in the RSFSR” of November 20, 1990. Its essence was the introduction of compulsory insurance for employees. The goal was to create pension funds that would guarantee the payment of pensions to citizens through contributions withheld from the wages of employed citizens. This emphasized the idea of ​​intergenerational solidarity, guaranteeing support for older people from young people. Contributions were mandatory and non-negotiable. All issues related to determining the norms and conditions for payment of contributions were regulated by the state. And the amount of further payments to pensioners was determined depending on the official length of service and contributions to the Pension Fund.
• The second stage was the adoption of the Federal Law “On the procedure for calculating and increasing state pensions” dated July 21, 1997 No. 113-FZ. These innovations were associated with a systematic increase in wages, which made it possible to raise pensions. However, from that time on, the pension was assigned depending on the individual coefficient of the pensioner. The calculation was carried out according to a formula in which the main indicators were: salary in percentage and total experience, as well as the average monthly earnings and the average monthly salary in the country for the same period, that is, for each pensioner the payment was already individual in nature.
• The third stage of pension system reform modern Russia was accompanied by the introduction of the following regulations:
  • Federal Law “On State Pension Provision” dated December 15, 2001 No. 166-FZ;
  • Federal Law “On Compulsory Pension Insurance” dated December 15, 2001 No. 167-FZ;
  • Federal Law “On Labor Pensions” dated December 17, 2001 No. 173-FZ;
  • Federal Law “On Investing in savings part labor pension» dated July 24, 2002 No. 111-FZ.
• The main goal of introducing all these bills is to improve the well-being of citizens by increasing their pension income. The programs provided for the expansion of pension payments using the funded part. The basis for payment was not seniority as before, and wage and the amount of contributions to the Pension Fund. Consequently, the higher the official salary and the higher the percentage of payments to the compulsory insurance fund, the higher the guaranteed pension in old age.
• Fourth important stage took place in 2013, with the release of the Federal Law “On Insurance Pensions” dated December 28, 2013 No. 400-FZ. This law allowed insurance pension payments to be made to all citizens who were insured according to the 2001 law, regardless of the payment of a funded pension. These payments were intended for citizens who have health problems, who have lost their ability to work, or who have lost an able-bodied family member.

Stage of pension reform 2015

Since 1992, the demographic situation in the country began to change for the worse, which led to a real decrease in the number of working-age population. Under these conditions, the state had to make additional contributions to the Pension Fund at the expense of the budget to fully satisfy the needs for covering pension payments. To solve the problem of lack of funds, the state planned a long-term pension reform.

The main innovation was the emergence of an insurance pension and insurance experience, allowing citizens to count on minimum mandatory payments when they reach retirement age. However, at the same time, in order to receive their well-deserved pension, citizens had to work for a certain period of time, which began to be established by the state.

Another innovation of 2015 was pension points, which a citizen must accumulate in the process of his labor activity. The number of points began to directly depend on the amount of contributions to the pension fund made by the employer.

Note! Since 2015, obtaining and accumulating insurance points has become possible only through official employment. The higher the official salary, the more points a citizen will receive for each calendar year.

Supporters of the new pension calculation system considered it quite effective for every citizen who cares about his future well-being. However, among experts and legislators there were opponents of the innovations, who pointed out their significant shortcomings:

• a gradual increase in the mandatory insurance period - if before 2015 it was at least 5 years, then by 2024 the length of service should reach at least 15 years;
• systematic increase in quantity pension points guaranteeing a pension in the future - in 2015 this figure was within 6.6, but by 2025 it should be 30 points.

Such changes were supposed to encourage citizens to take a more responsible approach to choosing a job, since only through official employment can one earn money required experience and points.

Features of pension reform in 2017

At the end of 2016 - beginning of 2017. initiatives have been repeatedly put forward to raise the retirement age for Russian citizens, some of which have been adopted Federal law“On amendments to certain legislative acts” dated May 23, 2016 No. 143-FZ. Civil service workers were the first to feel these changes, whose retirement age in 2017 was raised by 6 months and amounted to 55.5 years for women and 60.5 years for men. This planned increase should be gradual and reach 65 years for men and 63 years for women by 2032 and 2026, respectively.

Another mandatory change was the increase in pension fund contributions for the self-employed population. Consequently, if a citizen conducts business activities, he must receive timely information about the amount of the mandatory contribution, calculated from his official income. In addition, since 2017, the functions of administering insurance premiums have been transferred to the Federal Tax Service, while Pension Fund obligations remained for the administration of contributions made before 2017, as well as voluntary contributions to insurance and funded pensions.

The size has also increased fixed payment thanks to indexation on February 1 (5.4%) and April 1 (0.38%), which resulted in an increase minimum pension. This guaranteed increase was assigned automatically, without a corresponding application from citizens. State pension benefits also increased by 2.6%.

According to the Minister of Labor and social protection population of Maxim Topilin, in 2017 there will be no more major changes in the pension system. The reform policy will be carried out very smoothly and will not become critical for citizens of pre-retirement age.

Conclusion

Reforming the Russian pension system in a market economy was almost inevitable. In this regard, legislators adopted a number of regulations regulating the new system for calculating pensions. In 2017, the stage of gradually increasing the retirement age of citizens began, but so far this has only affected employees of public services.