Several years ago, the state actively promoted a pension co-financing program, through which citizens were encouraged to actively save money for a future pension in their pension account. Recently, nothing has been heard about co-financing, and, remembering that program, many are interested in whether it exists today. Will the pension co-financing program continue in 2021? Has anything been said about the program in the latest news? Is it possible to join this program today?
The leadership of our country is looking for different ways to improve the well-being of its citizens, especially when it comes to a secure old age. In 2008, Russian officials developed a new project that would allow them to co-finance their pension payments. To become a participant in this very promising idea, one had to deposit a certain amount, which ranges from 2 to 12 thousand rubles; every year the funds deposited in a certain savings account are doubled. It should be taken into account that if the funds deposited into the account are less than the established minimum, namely less than 2 thousand rubles, then there is no point in claiming to double this amount in a year.
The deadline for accepting applications for participation in this project was strictly limited, and everyone who could not confirm their participation should understand that the deadline for submitting applications for consideration has expired. Those lucky ones who managed to submit an application before December 31, 2014 and make an initial contribution before January 31, 2015 will continue to transfer part of the funds to an account opened specifically for this purpose. As a result, they can count on impressive bonuses from the state.
It should be clarified that those citizens who decided to take part in the project immediately before retiring cannot count on doubling the invested funds. But those who decided to continue working practice have already received very solid benefits from the government in the form of a fourfold increase in the initial investment. In other words, people who contributed 12 thousand rubles to this system were able to receive 60 thousand rubles as a bonus under the savings program in the last year alone.
What is the essence of the pension co-financing program?
Such a program appeared in the fall of 2008, and its essence is to encourage working citizens to more actively save for their future pension. Yes, a certain percentage is deducted monthly from the official salary of every working person, which goes to his pension account, but this may not be enough for a decent pension in old age.
By the way, in recent years, what was described above is not entirely true - money is indeed withdrawn from wages, but it does not reach the citizen’s pension account; the state simply takes it for itself, explaining this by economic difficulties.
The co-financing program was designed to encourage people to voluntarily save for their pensions, and to do so with the help of a pension fund, and not in the form of cash deposits in banks, purchases of currency, gold, etc.
How were people motivated? According to the rules of the program, a person could voluntarily deposit from two to twelve thousand a year into his pension account, and the state doubled this amount
. Thus, using the maximum that the program allowed, you could deposit a thousand rubles a month from your salary into your own pension account, and twelve thousand deposited would turn into twenty-four.
Of course, no one bothered to contribute more, the state would simply give the maximum on its part - 12,000 rubles per year. If you deposit an amount less than 12 thousand, but more than 2 thousand, it would double.
The co-financing program itself was conceived very well and fairly, and it had a certain potential. For example, the state could periodically review the upper limit for the amount of contributions and increase it. Still, 12 thousand in 2008 and 12 thousand in 2018 - this, you see, is a huge difference.
Advantages and disadvantages
Advantages:
- The co-financing program allows you to increase the size of your future pension by receiving investments from the state using the funds contributed.
- Program participants have the right to receive a tax deduction on the money contributed.
- The program assumes the possibility of inheritance.
- It is not necessary to make contributions strictly monthly.
- You can deposit amounts less than or more than 12,000 rubles, or even do so throughout the year.
Flaws:
- 12,000 rubles a year is a significant amount for many citizens. For the low-income population, these deposits are seen as dubious.
- For the “middle” class, such an increase in pension under this program looks insignificant and therefore not interesting.
- Program participants cannot use their savings until retirement.
- The pension reform in our country has already been carried out several times, and there are fears that there will again be changes that citizens will not be able to influence.
Contributions are possible exclusively in rubles. Therefore, Russians who increase their pensions in this way are not immune from inflation.
What happened to the co-financing program then?
Then 2014 came and the program began to be phased out. The first signs that all was not well with the Russian economy loomed back in 2013, when, despite an apparently prosperous situation, economic growth practically stopped. In 2014, there was a fall in oil prices and a collapse in the ruble exchange rate, there were sanctions over Crimea, and the country’s economy was saved only by accumulated reserves.
The government began to actively look for ways to save money, and many of the good initiatives of previous years were actually neutralized. One of the first to suffer was the pension co-financing program.
The program did not stop completely, but a deadline was set for working citizens to join the program - December 31, 2014.
After this date, it is impossible to join the co-financing program. Those who managed to submit the appropriate applications are still using the program, but every year there are fewer such people for several reasons.
Firstly, some people waited until retirement, reached it and are enjoying the benefits of co-financing.
Secondly, those who forgot to submit an application for participation in the program next year on time (and a person must confirm their desire to make voluntary contributions every year) or were unable to complete contributions dropped out of the program.
Finally, from 2021, the rule in the program will begin to work in practice - the state will co-finance a citizen’s pension for ten years after his entry into the program. That is, those who were the first to take advantage of the opportunity to participate in co-financing pensions in October 2008 will very soon not be able to continue participating.
How to receive funds under this program
Since pension co-financing has been completed, many would like to know how pensioners can receive money? Payments are made when applying for a funded old-age benefit by submitting a separate application to the Pension Fund. At the discretion of the inspector, payment may be:
- return one-time;
- divided into equal parts and paid over a certain period, for example, 5 or 10 years;
- pay for life.
On a note! The most popular option is divided into a period, and the most unprofitable is a lifetime payment (in this case, the increase in pension will be pennies every month).
Savings can be received not only by the participants of the state program, but also by legal successors - children (relative and adopted), husbands/wives, parents, brothers/sisters, grandchildren.
Savings will be paid in the event of the death of a state program participant if it occurs:
- before the pension is assigned or recalculated taking into account voluntarily contributed funds;
- after the appointment of an urgent benefit, which can be applied for by anyone, the balance from the pensioner’s personal account will be issued from the funded part (without taking into account the maternity capital, if it was used to form a social benefit for the deceased);
- after the pension has been assigned, but before the lump sum is issued - in this case, close relatives will be able to receive the money, but only if they lived with the deceased, as well as dependents (regardless of place of residence) within 16 weeks from the date of death. If there are no such persons, the money is redirected to the inheritance.
Important! If an indefinite payment of the funded part was initially arranged, that is, the amount was paid in equal monthly installments, the relatives will not receive the money.
To receive a pension increase, you must submit an application to the Pension Fund. Sometimes the inspector suggests writing three options and then choosing one - listing everything at once, in parts over a set period of time, or stretching it out over the rest of your life. The pensioner himself does not have the right to make such a choice.
If we are talking about payments to legal successors, then you will have to attach documents confirming the relationship. You must apply strictly within six months from the date of death of the program participant. If you miss the deadline, you will have to restore it through the court.
The package of documents is brought to the Pension Fund in person or sent by registered mail with a list of the attached papers and a notification. Within a month following the application, a decision is made on payments to legal successors.
In all cases, within 5 days from the date of the decision on approval/refusal, a notification is sent to the applicant. No later than the 20th day of the month following the month the decision was made, the money must be transferred.
When submitting an application, participants in the pension co-financing program were asked to choose a convenient option for how to receive money - in cash at the post office or by bank transfer to a bank account. Based on the selection, the transfer is made.
How to get money from the co-financing program
Savings are paid to citizens (or their legal successors) at the moment when they are assigned an insurance pension. You can choose one of three ways to receive funds:
- One-time payment. If all accumulated funds amount to 5% or less of the total amount of the pension (insurance and savings) in the account, then you can receive all the funds at the same time.
- Urgent payment. A citizen can set the period during which he will receive payments (at least 10 years). And he will receive them monthly.
- Funded pension. The funds are simply added to the funded part of the pension and will be paid to the citizen throughout his life.
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Why did you turn around?
According to expert estimates, only 800 thousand Russians decided to participate in the state pension co-financing program. The figure seems significant. In reality, on average, each person contributed 16-18 thousand rubles. (on average, this means that someone contributed 2 thousand per year, and someone 12), and this is “a drop in the bucket”, because in terms of pension payments, the increase will be 75 rubles per month. Even very comfortable conditions for participation failed to stimulate citizens, and the point is not that the majority do not think about a serene old age, but the banal impossibility of saving at least some crumbs for a rainy day.
The average salary in the country is 36 thousand rubles, while more than 70% of workers receive much less. Financiers claim that making long-term savings in the current economic situation is only possible if you earn at least 60 thousand rubles, and only a small percentage of Russians receive that much. Those who have good incomes are unlikely to choose a pension account for investment, because there are more profitable ways to increase savings, for example, regularly replenishing a bank deposit. And the withdrawal restrictions are minimal - I urgently needed money for treatment, so I went and got it.
How to make a contribution?
There are two options for making contributions to the pension co-financing program:
- through the accounting department,
- through the bank.
In the first option, the application is submitted to the accounting department. It states the amount of the contribution or as a percentage of the salary. If you decide to cancel the deposit, you need to write a notification about this to the accounting department. The employer may become a third party. Then he will make a voluntary contribution to increase his future pension. Its size can be any.
Payments are made through the bank based on a payment receipt. It is obtained from the territorial pension fund or on the official website. Depending on availability, contributions can be made in equal payments or as a one-time payment. Don't forget to take a copy of the payment document. It will be useful for filing tax deductions.
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Is it possible to exit the program?
There is no specific mechanism for exiting the state pension co-financing program in 2021. You can simply stop making new contributions if you are no longer satisfied with the conditions.
Is it possible to get money when leaving the program?
It’s worth noting that you won’t be able to get your money back either. Everything that has already been paid will begin to be paid when the person becomes a pensioner and begins to receive assigned pension contributions.
What do they offer?
Today, everyone without exception is concerned about the planned pension reform, certain provisions of which, according to forecasts, will begin to be implemented as early as 2021. What final form it will take is still unknown, but one of the innovations could be the IPC, which is considered today as an alternative to the unsuccessful idea of co-financing a pension.
At first glance, the idea of introducing the IPC seems interesting - citizens will be able to independently save for their old age, increasing the level of civic responsibility. When you retire, there will be no one to blame: what you have accumulated is what you get. But experts do not yet see the possibility of linking the IPC with existing corporate programs for increasing pension payments, in which about 6 million Russians participate. They make annual contributions totaling 6 trillion rubles. Corporate programs have been developed in various companies, within their framework, a portion of employee earnings is transferred to their future pensions - most of these programs have their own characteristics.
And where are the guarantees that Russians will be interested in IPK? And they will not just be interested, but will want to give up their current needs in favor of pension savings?
For motivation, experts suggest using effective tools:
- abolish income tax on contributions to non-state funds (today only contributions paid to the Pension Fund are not subject to personal income tax);
- increase the social tax for the return of paid personal income tax to 400 thousand rubles. (today its size is 120 thousand rubles);
- allow employers to deduct money contributed to the IPC from income tax, equating it to labor costs;
- the state should consider other tax benefits for participants;
- direct all additional deductions from employers for harmful and dangerous working conditions to corporate pension funds.
On a note! It is predicted that without serious incentives, the maximum number of people wishing to form an individual industrial complex will not exceed 2%.
Another important question remains unresolved: will participation in the IPC be voluntary? It was previously reported that only “auto-subscription” would allow the idea not to be put to rest: deductions from wages would be made automatically by the employer, but at any time the employee would be allowed to write a statement and leave the program.
This approach contradicts the law and legal norms of the Labor Code, so the Central Bank started talking about the idea of auto-registration, although the essence has not changed much. After being entered into a single database, each employee will be required to deduct from 1 to 6% of their salary to the funded part, and to withdraw they will again have to write an application.
It is still unknown what method the state will choose to co-finance pensions and maintain the pension system, the serious tests of which will begin in the mid-20s. Based on the reviews, it is obvious that participation in the scheme with doubling investments turned out to be a complete disappointment for many.
Prepared based on materials taken from open sources specifically for the site. Author: Andrey K.
Period of the program and procedure for transferring additional contributions
The co-financing program is calculated for 10 years, during which citizens must make contributions. Moreover, upon receipt of payments, the amount will be increased, in some cases by 4 times.
Payments are received in the following order:
- Payments are made only after the 10-year contribution period, not earlier.
- You can not receive payments after 10 years, but extend them for another 4 years, thereby receiving a 4-fold increase in the amount.
- Funds can be added either to the pension benefit as an increase or as additional income.
Due to certain circumstances, a citizen may wish to withdraw from the program. To realize this desire, you should stop making contributions to the program.
