Consultation revealed doubling pension strategy by economist
In a recent statement to Tatar-inform, Igor Balynin, an associate professor at the Financial University under the Government of the Russian Federation, highlighted a key factor contributing to the growth of pension sizes in Russia. According to Balynin, the application of increasing coefficients to fixed payments for insurance pensions can lead to a significant increase in the size of these fixed payments over time.
The pension amount in Russia is calculated by multiplying the individual pension coefficient (IPC) by a value in rubles, and adding a fixed base amount. The IPC and its value can undergo increases (or indexation) in the years following the pension right acquisition, causing the total pension amount to grow as the coefficients are increased in subsequent years.
For instance, with a minimum IPC of 30 points, the pension is calculated as 30 x 145.69 + 8,907.7 = 13,278.4 rubles, where 145.69 rubles is the value per IPC point and 8,907.7 rubles is the fixed base. If the coefficient value or the fixed base is increased in following years, the total pension amount will increase proportionally.
This mechanism, part of the pension indexation and adjustment process in the Russian pension system, is designed to support pensioners’ living standards over time. It is important to note that no indication was found that such increases would decrease pension sizes; rather, the system’s design promotes gradual increments through coefficient adjustments.
Balynin also emphasized the importance of following the law regarding wages and pension rights. He warned against agreeing to receive wages in envelopes, as it violates current legislation and does not contribute to the formation of pension rights.
Interestingly, the size of the officially received income primarily determines the number of coefficients applied to the fixed payment, which in turn affects the size of the pension. Therefore, if an application for an insurance pension for old age is made 10 years after the right to do so, the number of IPK increases by 2.32 times and the size of the fixed payment by 2.11 times. If the application is made 5 years after the right, the increase is 45% for the number of IPK and 36% for the fixed payment size.
This policy or practice, which leads to a significant increase in pension sizes, appears to be specific to Russia, according to the context of the source. The application of increasing coefficients to fixed payments for insurance pensions, if applied after the right to receive the pension has been established, effectively raises the fixed payments, helping to maintain or improve pensioners’ income relative to inflation or other economic factors.
- It's interesting to note that the size of the officially received income in Russia significantly influences the number of individual pension coefficients (IPC) applied to fixed payments, which subsequently affects the size of the pension, resulting in a potential increase over time.
- In the realm of personal-finance and business, the Russian pension system employs a unique strategy to support pensioners' living standards by applying increasing coefficients to fixed payments for insurance pensions, a practice that can lead to a significant growth in pension sizes over subsequent years.
