What will the new retirement benefits of government agencies and institutions be
In October 2024, the ten-year transitional period stipulated by government agencies and public institutions is about to come to an end. After the end of the transitional period, the calculation of pension benefits for retirees will fully adopt the new retirement benefit calculation formula. This calculation formula has actually been implemented since October 2014. The timing of its introduction in various regions is generally between 2015 and 2016 (this is due to the different times when localities implemented the national pension insurance system reform).
The new retirement benefit calculation formula mainly consists of four major parts.
First, the basic pension.
Basic pension = the average social wage of the year prior to retirement × (1 + the individual's average contribution index) × the number of contribution years × 1%.
① The calculation of the individual's average contribution index for government agencies and public institutions is relatively complex.
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The actual contribution index is essentially equal to the contribution base of the year divided by the average wage of the previous year. If the local area starts implementing the new annual contribution base limits from January 1st, the actual contribution index is the same as the contribution level. For a 60% level, the actual contribution index is 0.6. However, places like Beijing and Shanghai implement new contribution base limits from July 1st, which leads to a complex calculation of the average contribution index.
The average contribution index for retired workers in government agencies and public institutions = (the sum of the deemed contribution index × deemed contribution years + the sum of actual contribution indices) ÷ (deemed contribution years + actual contribution years).
Deemed contribution years, everyone understands this part, refers to the contribution details before October 2014. The deemed contribution index is mainly determined by the sum of three deemed contribution indices based on factors such as the individual's position level, job salary grade, and corresponding retirement living subsidies at the time of retirement.
Generally speaking, the average contribution index for the majority of employees in government agencies and public institutions will be between 1.0 and 2.0, which is mainly because the wage and benefit level differences among employees in these institutions are not significant.② Contribution period, this part, as mentioned above, includes both actual contribution years and deemed contribution years, and it is specific to the month, with each month being convertible to 0.0833 years. The original work seniority system was actually specific to the day.
③ The average social salary of the year before retirement, which is now also referred to as the pension calculation base of that year in many provinces. However, the future calculation base will all transition to the full-scale average social salary, and some areas such as Shanghai and Heilongjiang have already completed the transition. The pension calculation base across various regions in China in 2023 ranges from 6,000 to 13,000 yuan. It is expected that there will be an increase in 2024.
According to the calculation formula mentioned above, we can provide a simple example. Suppose Sister Niu has a working life of 30 years, retires at the age of 50, with 20 years of deemed contribution years and 10 years of actual contribution years.
If the actual average contribution index is 1.2 and the deemed contribution index is 1.5, then the average contribution index is (1.2×10 years + 1.5×20 years) ÷ (10 years + 20 years) = 1.4.
If the pension calculation base is 8,000 yuan, according to the basic pension calculation formula, she can receive 8,000 yuan × (1 + 1.4) / 2 × 30 years × 1% = 2,880 yuan.
Secondly, the personal account pension.
The personal account pension is equal to the balance of the personal account of the pension insurance ÷ the number of months determined by the retirement age.
① The balance of the personal account of the pension insurance, which we can check through the social security system, is recorded at 8% of the monthly contribution base, and interest is also calculated annually at the accounting interest rate uniformly stipulated by the state.
② The number of months determined by the retirement age, which is in accordance with the national unified requirements. At the age of 50, it is 195 months, at 55 it is 170 months, and at 60 it is 139 months. The later the retirement, the smaller the number of months for calculation, and the higher the personal account pension. The specific derivation formula is as follows:Assuming the aforementioned "Old Sister Niu" retires at the age of 50, and the current balance of her personal account for the pension insurance is 70,000 yuan, the personal account pension is calculated by dividing 70,000 yuan by 195, which results in 358.97 yuan per month.
Thirdly, the transitional pension.
The transitional pension is equal to the social average wage of the year prior to retirement multiplied by the individual's deemed contribution index multiplied by the deemed contribution years before September 2014 multiplied by the local stipulated transitional coefficient (usually between 1.0% and 1.4%).
According to the hypothetical situation above, with a social average wage of 8,000 yuan, a deemed contribution index of 1.4, 20 years of deemed contribution years, and assuming the transitional coefficient is the same as in Shandong Province, Hebei Province, and other places at 1.3%. The calculation process for the transitional pension is as follows:
8,000 yuan * 1.4 * 20 years * 1.4% = 3,136 yuan.
Fourthly, the occupational annuity.
The occupational annuity is equal to the balance of the individual's account for the occupational annuity at retirement divided by the number of months determined by the retirement age.
The calculation method is the same as for the personal account pension. However, the accumulation in the individual's account for the occupational annuity is 4% from the individual plus 8% from the employer, which is 1.5 times the accumulation in the personal account for the pension insurance.
Since the interest rate for the occupational annuity depends on the investment return rate, it is not as stable as the accounting interest rate for the personal account pension insurance.Assuming that the balance in the personal account of the occupational pension upon retirement is 90,000 yuan, a person retiring at the age of 50 can receive a monthly pension of 461.53 yuan.
The total of the above four parts of the pension benefits amounts to 6,836.5 yuan.
If Sister Liu's old method of retirement benefits is higher than 6,836.5 yuan, those who retire before October 2024 will continue to receive their pensions according to the higher old method. However, after October 2024, the pension will only be issued according to 6,836.5 yuan, which would be relatively disadvantageous. But in the vast majority of cases, the new method of retirement benefits is higher, and this is the main change. #Headline Creation Challenge# #How to Calculate Pension for Public Institutions#
In October 2024, the ten-year transitional period stipulated by government agencies and public institutions is about to come to an end. After the end of the transitional period, the calculation of pension benefits for retirees will fully adopt the new retirement benefit calculation formula. This calculation formula has actually been implemented since October 2014. The timing of its introduction in various regions is generally between 2015 and 2016 (this is due to the different times when localities implemented the national pension insurance system reform).
The new retirement benefit calculation formula mainly consists of four major parts.
First, the basic pension.
Basic pension = the average social wage of the year prior to retirement × (1 + the individual's average contribution index) × the number of contribution years × 1%.
① The calculation of the individual's average contribution index for government agencies and public institutions is relatively complex.
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The actual contribution index is essentially equal to the contribution base of the year divided by the average wage of the previous year. If the local area starts implementing the new annual contribution base limits from January 1st, the actual contribution index is the same as the contribution level. For a 60% level, the actual contribution index is 0.6. However, places like Beijing and Shanghai implement new contribution base limits from July 1st, which leads to a complex calculation of the average contribution index.
The average contribution index for retired workers in government agencies and public institutions = (the sum of the deemed contribution index × deemed contribution years + the sum of actual contribution indices) ÷ (deemed contribution years + actual contribution years).
Deemed contribution years, everyone understands this part, refers to the contribution details before October 2014. The deemed contribution index is mainly determined by the sum of three deemed contribution indices based on factors such as the individual's position level, job salary grade, and corresponding retirement living subsidies at the time of retirement.
Generally speaking, the average contribution index for the majority of employees in government agencies and public institutions will be between 1.0 and 2.0, which is mainly because the wage and benefit level differences among employees in these institutions are not significant.② Contribution period, this part, as mentioned above, includes both actual contribution years and deemed contribution years, and it is specific to the month, with each month being convertible to 0.0833 years. The original work seniority system was actually specific to the day.
③ The average social salary of the year before retirement, which is now also referred to as the pension calculation base of that year in many provinces. However, the future calculation base will all transition to the full-scale average social salary, and some areas such as Shanghai and Heilongjiang have already completed the transition. The pension calculation base across various regions in China in 2023 ranges from 6,000 to 13,000 yuan. It is expected that there will be an increase in 2024.
According to the calculation formula mentioned above, we can provide a simple example. Suppose Sister Niu has a working life of 30 years, retires at the age of 50, with 20 years of deemed contribution years and 10 years of actual contribution years.
If the actual average contribution index is 1.2 and the deemed contribution index is 1.5, then the average contribution index is (1.2×10 years + 1.5×20 years) ÷ (10 years + 20 years) = 1.4.
If the pension calculation base is 8,000 yuan, according to the basic pension calculation formula, she can receive 8,000 yuan × (1 + 1.4) / 2 × 30 years × 1% = 2,880 yuan.
Secondly, the personal account pension.
The personal account pension is equal to the balance of the personal account of the pension insurance ÷ the number of months determined by the retirement age.
① The balance of the personal account of the pension insurance, which we can check through the social security system, is recorded at 8% of the monthly contribution base, and interest is also calculated annually at the accounting interest rate uniformly stipulated by the state.
② The number of months determined by the retirement age, which is in accordance with the national unified requirements. At the age of 50, it is 195 months, at 55 it is 170 months, and at 60 it is 139 months. The later the retirement, the smaller the number of months for calculation, and the higher the personal account pension. The specific derivation formula is as follows:Assuming the aforementioned "Old Sister Niu" retires at the age of 50, and the current balance of her personal account for the pension insurance is 70,000 yuan, the personal account pension is calculated by dividing 70,000 yuan by 195, which results in 358.97 yuan per month.
Thirdly, the transitional pension.
The transitional pension is equal to the social average wage of the year prior to retirement multiplied by the individual's deemed contribution index multiplied by the deemed contribution years before September 2014 multiplied by the local stipulated transitional coefficient (usually between 1.0% and 1.4%).
According to the hypothetical situation above, with a social average wage of 8,000 yuan, a deemed contribution index of 1.4, 20 years of deemed contribution years, and assuming the transitional coefficient is the same as in Shandong Province, Hebei Province, and other places at 1.3%. The calculation process for the transitional pension is as follows:
8,000 yuan * 1.4 * 20 years * 1.4% = 3,136 yuan.
Fourthly, the occupational annuity.
The occupational annuity is equal to the balance of the individual's account for the occupational annuity at retirement divided by the number of months determined by the retirement age.
The calculation method is the same as for the personal account pension. However, the accumulation in the individual's account for the occupational annuity is 4% from the individual plus 8% from the employer, which is 1.5 times the accumulation in the personal account for the pension insurance.
Since the interest rate for the occupational annuity depends on the investment return rate, it is not as stable as the accounting interest rate for the personal account pension insurance.Assuming that the balance in the personal account of the occupational pension upon retirement is 90,000 yuan, a person retiring at the age of 50 can receive a monthly pension of 461.53 yuan.
The total of the above four parts of the pension benefits amounts to 6,836.5 yuan.
If Sister Liu's old method of retirement benefits is higher than 6,836.5 yuan, those who retire before October 2024 will continue to receive their pensions according to the higher old method. However, after October 2024, the pension will only be issued according to 6,836.5 yuan, which would be relatively disadvantageous. But in the vast majority of cases, the new method of retirement benefits is higher, and this is the main change. #Headline Creation Challenge# #How to Calculate Pension for Public Institutions#