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According to data from the Ministry of Social Security and Labor, during the first quarantine, when the government banned many activities, there were more than 200,000 stops for longer or shorter periods. workers.
They did not receive a normal salary and subsidies were paid to their employers. The future pension depends on the amount of the salary. When it decreases, the future pension will also decrease.
How Sodra and Supplementary Pension are calculated
The old-age pension consists of two parts: general and individual. The general part depends on the time of service of a person (more precisely, its relation to the time of service required) and the amount of the basic pension, which is approved annually by law.
As a general rule, if a person has worked during their lifetime to reach the required seniority (31.5 years this year), their total pension will consist of a basic pension, currently EUR 180.95 (starting at EUR 193.92) .
If the time of service is greater or less, the total part of the pension will be proportionally greater or less.
The individual part of the pension depends on the salary received by the employee. If it is equal to the national average salary (VMU), which this year is 1,241.4 euros before taxes, it accumulates 1 unit of account (AV) per year.
Those who earn more or less accumulate a correspondingly greater or lesser number of units of account. When calculating the pension, the AV accumulated during the entire working year is evaluated.
It is true that the law stipulates that a resident can accumulate a maximum of 5 units of account per year. In other words, if you earn more than 5 VMU, the pension will not be higher.
In its calculation, the number of units accumulated by a person during their working career is multiplied by their value, which is approved annually. This year it’s 3.81 euros, next year – 4.08 euros.
For example, if a person has accumulated the required time of service during his life and has earned an average salary, his individual part of the pension will be a little more than 120 euros (31.5 years x 1 AV x 3.81).
Adding the total to this amount, the pension of said employee will be just over € 300 (180.95 + 120.02).
In addition to the Sodra pension, many employees also accumulate additional pensions in the second pillar pension funds. For this, they allocate from 2.1 percent. up to 3 percent. your salary.
As mentioned, with the introduction of quarantine by the government and the prohibition of certain activities, some workers are forced to go into periods of inactivity. During them, a lower salary is paid, which affects the future part of Sodra’s individual pension and the supplementary pension accumulated in the pension funds. So how much will they fall?
Undermine future retiree losses
The Ministry of Social Security and Labor recalled that during the inactivity time the worker is paid a salary, which, if the full-time rate is agreed in their employment contract, it cannot be less than the minimum monthly salary (if the person is in downtime for a full month).
However, there is only one lower limit for wages: the employer can pay normal wages and downtime and benefit from state aid by subsidizing it.
Focus on employers who pay more than the monthly minimum wage (MMA) during downtime, 70 percent confirms. salary subsidy during downtime with higher ceilings – 910.5 euros. 90 percent is also possible. grants capped at € 607 or 100%. allowances with the same cap if the employee is 60 years of age or older.
“When calculating a social security pension, the amount of social security contributions is evaluated. Thus, if a person earns less during certain periods of his career, he acquires fewer units of account during those periods. It is true that in terms of downtime, its impact on future pensions will be minimal, “the ministry said in a comment.
2020 The amount of VMU approved in the Sodra budget and used to determine the number of accounting units is 1,241.4 euros. At 8.72 percent. pension insurance rate, in 2020 a person must pay 1299 euros of social security pension contributions to acquire 1 unit of account.
If a person works for VMU for half a year, and for MMA for half a year due to downtime and quarantine, the amount of the contributions paid will be 967.08 euros. In this case, the number of account units acquired per year will be 0.75 AV.
Contributed in the amounts of 2020, 2.84 euros per year will be added to the part of the individual pension of this person. If he had worked for the Vytautas Magnus University throughout the year, 1 AV, that is, 3.81 euros, would have contributed to his pension.
Thus, if an average wage earner has to meet the minimum for half a year due to quarantine and inactivity time, his old-age pension will be almost 1 euro less per month. You will lose € 12 a year in retirement and € 120-180 in 10-15 years.
These losses will be much greater for those who, as a result of government decisions, have been forced to go out to earn more than their median salary, or whose downtime will last more than half a year.
“The downtime since the beginning of the quarantine was announced in total 202.5 thousand. Employees, but how many of them and how the amount of the pension could change in the future due to downtime, we cannot say, Because each of these employees was on leave for a different period, they earned a different salary.
For example, when a work shift in the factories was abandoned, half of the employees were declared off duty for one week and the other half for another, ”explained the Ministry of Social Security and Labor.
The supplementary pension will also be reduced
Marijus Kalesinskas, Chairman of the Board of the Association of Pension Fund Participants, admits that those who accumulate pensions in the second pillar funds will also suffer the quarantine and downtime announced by the Government.
“It is fortunate that in the case of downtime, the transferred part of the salary is reduced, but the subsidy from the state budget remains unchanged,” he said.
Using Sodra’s public calculator and his assumptions, he calculated that the loss of a supplementary pension in old age can also range from a few to several tens of euros a month.
M. Kalesinsk used three different scenarios. For example, if an employee’s downtime lasted 3 months this year, their salary was reduced from VMU to MMA, and they had 10 years left until retirement, the accumulation pension (standard annuity benefit) will be 0.43 euros less per month for the rest of your life.
If the downtime lasted 6 months and the compensation decreased from 2 VMU to MMA and there were 10 years left until retirement, the accumulation pension (standard annuity benefit) will be 2.49 EUR per month lower.
Finally, if the downtime lasted for 9 months and the compensation fell from 5 VMU to MMA and there were 30 years left until retirement, the accumulation pension (standard annuity benefit) will be 29.59 euros less per month.
It is easy to calculate that if a retired person lives to die 10-20 years before his death, the total pension he will receive will be reduced by thousands of euros during this period, precisely because of the reduction in quarantine and downtime.
However, should these losses be compensated if the reduction of the future pension does not depend entirely on the behavior of the person but on the decision of the Government?
“I am not a huge supporter of compensation for everything, unless there is a clear basis for it. In this case, a pandemic can be equated with a natural disaster: everyone suffers, including those who accumulate, and this is not the result of errors or decisions made by the authorities.
Because downtime in months, but not years, is still not very high, those who accumulate it may have to accept it like other social groups.
However, it should be noted that young accumulators with high earnings before downtime will be the relatively worst hit, so if downtime is prolonged, it is necessary to assess how the government or employers can reduce future losses ”, Summarized M. Kalesinskas.
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