Will the pensions of government agencies and institutions be significantly reduc
As October approaches, I often encounter friends asking whether the pensions for government and public institutions will be significantly reduced after October. Some even call it the "pension convergence," implying that both enterprises and government and public institutions will receive the same pension benefits.
In fact, there is indeed an important event happening in October 2024, which mainly refers to the end of the ten-year transitional period for the calculation of pension benefits (minimum retirement benefits based on the old method) set by government and public institutions.
Ten-year transitional period.
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The method during the transitional period mainly refers to the comparison between the new and old methods of retirement. If the old method results in higher retirement benefits, the retirement benefits will still be distributed according to the old method. However, starting from 2024, if the new method results in higher retirement benefits, they will be distributed according to the new method. And for the vast majority of retirees, the new method does yield higher retirement benefits.
From this pattern, it is true that the calculation results of some retirees' pensions after this period may not catch up with the previous results, but it is not a reduction in pensions.
Moreover, after everyone retires, pensions will be adjusted according to the national unified pension adjustment model every year, which is based on the increase in prices and wages. The pension increase in 2024 marks the 9th consecutive year of unified adjustment for pension benefits for both enterprise and government and public institution retirees since 2016.
New method of retirement benefits.
Starting from October 2024, the calculation of pensions for retirees from government and public institutions will fully adopt the basic pension calculation formula that was established in October 2014.The basic pension mainly consists of three parts: the basic pension, the personal account pension, and the transitional pension. In addition, there is the supplementary pension benefit known as the occupational annuity, which when combined, constitutes the new method's pursuit of benefits.
Although nominally the same as the basic pension, personal account pension, and transitional pension in the pension calculation formula for enterprise retirees, there are similarities as well as differences.
For instance, the calculation method for the basic pension and personal account pension generated by the actual payment period is the same. However, if the payment base is different, these two parts of the pension will also be different.
The most significant difference lies in the deemed payment period. For government and public institution employees, it mainly refers to the continuous work experience before October 2014 that can be deemed as payment. There is also a deemed payment index, which is comprehensively determined based on factors such as the retirement position level. For enterprise retirees, it mainly refers to the payment period and deemed payment period before 1996, with the deemed payment index either calculated as 1 or based on the actual payment index, which is a significant difference.
Moreover, many people do not consider that the state has included non-system personnel such as flexible employment personnel and employees with interrupted payments into the participants of the basic pension insurance for enterprise employees. These individuals often have a low payment base and short payment periods, resulting in a naturally low calculated pension, which will significantly lower the pension benefit level upon retirement.
Employees of government and public institutions generally enter in their 20s and, as long as they do not commit a crime or resign, can usually work until retirement, which is relatively stable. When calculating the pension, the payment period is long, and the accumulation in the personal accounts of pension insurance and occupational annuity is also considerable. Therefore, the pension benefit level will be higher.
Government and public institutions have established occupational annuities since October 2014, many state-owned enterprises have established enterprise annuity systems, and some better private enterprises enhance the long-term benefits of employees through equity dividends and other means. Overall, the pension levels in good units are not low.
So, do not be misled by the initial misconception. The pension calculation for government and public institutions is consistent and stable, and it will not change much due to October 2024, nor will the pension after retirement decrease. With the increase in social average wages and prices, the pension will continue to improve. #Top Headline Creation Challenge# #What does the pension integration mean#
As October approaches, I often encounter friends asking whether the pensions for government and public institutions will be significantly reduced after October. Some even call it the "pension convergence," implying that both enterprises and government and public institutions will receive the same pension benefits.
In fact, there is indeed an important event happening in October 2024, which mainly refers to the end of the ten-year transitional period for the calculation of pension benefits (minimum retirement benefits based on the old method) set by government and public institutions.
Ten-year transitional period.
Advertisement
The method during the transitional period mainly refers to the comparison between the new and old methods of retirement. If the old method results in higher retirement benefits, the retirement benefits will still be distributed according to the old method. However, starting from 2024, if the new method results in higher retirement benefits, they will be distributed according to the new method. And for the vast majority of retirees, the new method does yield higher retirement benefits.
From this pattern, it is true that the calculation results of some retirees' pensions after this period may not catch up with the previous results, but it is not a reduction in pensions.
Moreover, after everyone retires, pensions will be adjusted according to the national unified pension adjustment model every year, which is based on the increase in prices and wages. The pension increase in 2024 marks the 9th consecutive year of unified adjustment for pension benefits for both enterprise and government and public institution retirees since 2016.
New method of retirement benefits.
Starting from October 2024, the calculation of pensions for retirees from government and public institutions will fully adopt the basic pension calculation formula that was established in October 2014.The basic pension mainly consists of three parts: the basic pension, the personal account pension, and the transitional pension. In addition, there is the supplementary pension benefit known as the occupational annuity, which when combined, constitutes the new method's pursuit of benefits.
Although nominally the same as the basic pension, personal account pension, and transitional pension in the pension calculation formula for enterprise retirees, there are similarities as well as differences.
For instance, the calculation method for the basic pension and personal account pension generated by the actual payment period is the same. However, if the payment base is different, these two parts of the pension will also be different.
The most significant difference lies in the deemed payment period. For government and public institution employees, it mainly refers to the continuous work experience before October 2014 that can be deemed as payment. There is also a deemed payment index, which is comprehensively determined based on factors such as the retirement position level. For enterprise retirees, it mainly refers to the payment period and deemed payment period before 1996, with the deemed payment index either calculated as 1 or based on the actual payment index, which is a significant difference.
Moreover, many people do not consider that the state has included non-system personnel such as flexible employment personnel and employees with interrupted payments into the participants of the basic pension insurance for enterprise employees. These individuals often have a low payment base and short payment periods, resulting in a naturally low calculated pension, which will significantly lower the pension benefit level upon retirement.
Employees of government and public institutions generally enter in their 20s and, as long as they do not commit a crime or resign, can usually work until retirement, which is relatively stable. When calculating the pension, the payment period is long, and the accumulation in the personal accounts of pension insurance and occupational annuity is also considerable. Therefore, the pension benefit level will be higher.
Government and public institutions have established occupational annuities since October 2014, many state-owned enterprises have established enterprise annuity systems, and some better private enterprises enhance the long-term benefits of employees through equity dividends and other means. Overall, the pension levels in good units are not low.
So, do not be misled by the initial misconception. The pension calculation for government and public institutions is consistent and stable, and it will not change much due to October 2024, nor will the pension after retirement decrease. With the increase in social average wages and prices, the pension will continue to improve. #Top Headline Creation Challenge# #What does the pension integration mean#