After the pension is unified, what are the differences in the calculation of pen
The integration of pension systems, which refers to the unification of the pension insurance systems for retirees from government agencies, public institutions, and enterprises, is often misunderstood to be the end of a 10-year transition period for government and public institution pension benefits in October 2024.
The 10-year transition period for government and public institutions is for comparing the new and old methods of calculating retirement benefits. After the transition period ends, the calculation of pensions for government and public institution employees will entirely adopt the new method.
The new method for calculating retirement benefits for government and public institutions was introduced in October 2014, following the implementation of the pension insurance system reform. The basic principle is the same as for enterprise employees, which is to reward more contributions with higher benefits and longer contributions with greater benefits.
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Due to the relatively high salary levels of employees in government and public institutions, the contribution base is relatively high. Coupled with the relatively stable nature of their work and longer contribution periods, as well as the establishment of supplementary pension mechanisms such as occupational annuities, the calculated pension benefits remain very high.
For example, for a government or public institution employee retiring in Shandong Province with a total service period of 40 years, including 30 years of deemed contribution years, assuming the deemed contribution index and the average contribution index are both exactly 1.6, with a personal account balance of 80,000 yuan in the pension insurance and a personal account balance of 120,000 yuan in the occupational annuity, the specific calculation process for a 60-year-old retiree is as follows:
① The basic pension part is calculated as 40 years multiplied by (1+1.6)/2 times 1% of the pension payment base, which results in 52% of the pension payment base.
In 2023, the pension payment base for retirees in Shandong Province is 7,468 yuan, and the basic pension benefit is 3,883 yuan. If it were this year, the payment base benefit would be higher.
② The personal account pension is calculated as the account balance divided by the number of months determined by the retirement age, which is 80,000 yuan divided by 139, resulting in 575 yuan.
The calculation method for the occupational annuity part is the same as for the personal account pension, and the result is 863 yuan. However, the occupational annuity is limited to the pension insurance personal account, and once it is exhausted, there will be no more, and it is subject to personal income tax. Generally, it is expected to be exhausted 15 to 25 years after retirement. If one wishes to have a lifelong pension, it is recommended to use it to purchase commercial pension insurance.③ Transitional pension, which is calculated as 30 years of deemed contribution period × a deemed contribution index of 1.6 × a transitional coefficient of 1.3% × the pension calculation base of 7,468 yuan, results in 4,660 yuan.
Adding up all the parts above, the result is 9,981 yuan.
In terms of pension benefits, the principle of "more contributions, more benefits" and "longer contributions, more benefits" is very evident. For example, another self-employed individual, a woman retiring at the age of 50, has only contributed to social security at the 60% level for 15 years, with a personal account balance of only 40,000 yuan. In this case, the pension is calculated as follows:
① Basic pension part, which is calculated as 15 years × (1 + 0.6) ÷ 2 × 1% of the pension calculation base. The calculation base is also based on 7,468 yuan, resulting in 896 yuan per month.
② Personal account pension, which is calculated as 40,000 yuan divided by the number of months for retirement at the age of 50, which is 195 months, resulting in 205 yuan per month.
The total pension from both parts is only 1,100 yuan per month.
Overall, since the basic pension and personal account pension are calculated using a unified formula, if the contribution period and personal account balance are the same, and under the same retirement age conditions, everyone's basic pension will be the same. Additionally, if a company has established a pension system and professional annuity, this part of the treatment will also be the same. However, compared to self-employed individuals, due to the heavier contribution burden, many people may still choose a shorter contribution period and a lower contribution base, which is why the pension might be lower. #Top Headline Creation Challenge# #Is there a big difference in pension calculation bases?#
The integration of pension systems, which refers to the unification of the pension insurance systems for retirees from government agencies, public institutions, and enterprises, is often misunderstood to be the end of a 10-year transition period for government and public institution pension benefits in October 2024.
The 10-year transition period for government and public institutions is for comparing the new and old methods of calculating retirement benefits. After the transition period ends, the calculation of pensions for government and public institution employees will entirely adopt the new method.
The new method for calculating retirement benefits for government and public institutions was introduced in October 2014, following the implementation of the pension insurance system reform. The basic principle is the same as for enterprise employees, which is to reward more contributions with higher benefits and longer contributions with greater benefits.
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Due to the relatively high salary levels of employees in government and public institutions, the contribution base is relatively high. Coupled with the relatively stable nature of their work and longer contribution periods, as well as the establishment of supplementary pension mechanisms such as occupational annuities, the calculated pension benefits remain very high.
For example, for a government or public institution employee retiring in Shandong Province with a total service period of 40 years, including 30 years of deemed contribution years, assuming the deemed contribution index and the average contribution index are both exactly 1.6, with a personal account balance of 80,000 yuan in the pension insurance and a personal account balance of 120,000 yuan in the occupational annuity, the specific calculation process for a 60-year-old retiree is as follows:
① The basic pension part is calculated as 40 years multiplied by (1+1.6)/2 times 1% of the pension payment base, which results in 52% of the pension payment base.
In 2023, the pension payment base for retirees in Shandong Province is 7,468 yuan, and the basic pension benefit is 3,883 yuan. If it were this year, the payment base benefit would be higher.
② The personal account pension is calculated as the account balance divided by the number of months determined by the retirement age, which is 80,000 yuan divided by 139, resulting in 575 yuan.
The calculation method for the occupational annuity part is the same as for the personal account pension, and the result is 863 yuan. However, the occupational annuity is limited to the pension insurance personal account, and once it is exhausted, there will be no more, and it is subject to personal income tax. Generally, it is expected to be exhausted 15 to 25 years after retirement. If one wishes to have a lifelong pension, it is recommended to use it to purchase commercial pension insurance.③ Transitional pension, which is calculated as 30 years of deemed contribution period × a deemed contribution index of 1.6 × a transitional coefficient of 1.3% × the pension calculation base of 7,468 yuan, results in 4,660 yuan.
Adding up all the parts above, the result is 9,981 yuan.
In terms of pension benefits, the principle of "more contributions, more benefits" and "longer contributions, more benefits" is very evident. For example, another self-employed individual, a woman retiring at the age of 50, has only contributed to social security at the 60% level for 15 years, with a personal account balance of only 40,000 yuan. In this case, the pension is calculated as follows:
① Basic pension part, which is calculated as 15 years × (1 + 0.6) ÷ 2 × 1% of the pension calculation base. The calculation base is also based on 7,468 yuan, resulting in 896 yuan per month.
② Personal account pension, which is calculated as 40,000 yuan divided by the number of months for retirement at the age of 50, which is 195 months, resulting in 205 yuan per month.
The total pension from both parts is only 1,100 yuan per month.
Overall, since the basic pension and personal account pension are calculated using a unified formula, if the contribution period and personal account balance are the same, and under the same retirement age conditions, everyone's basic pension will be the same. Additionally, if a company has established a pension system and professional annuity, this part of the treatment will also be the same. However, compared to self-employed individuals, due to the heavier contribution burden, many people may still choose a shorter contribution period and a lower contribution base, which is why the pension might be lower. #Top Headline Creation Challenge# #Is there a big difference in pension calculation bases?#