WHAT TO BRING PENSION REFORM?
Who will feel the biggest positive change?
From next year, pensions will grow more than the current indexation formula predicts. The biggest positive effects will be felt by seniors with higher contributions – those with higher salaries and longer length of service – and those with the lowest social security pensions.
When calculating the old-age pension, both the general and individual parts of it are important. The general part of the pension provides a minimum income, while the amount of the individual pension depends on the amount and duration of the lifetime contributions.
Now, in the average pension with the required length of service, the general part is about 60 percent of the amount of the pension, and the individual – only 40 percent. The importance of the individual part is expected to increase and become more significant. This creates incentives and motivation for people to pay more social security contributions and receive a higher pension accordingly.
The increase in the share of the general pension will affect about 70 thousand. retirees, even 2/3 of whom were women who, due to various life circumstances, could not gain more experience: caring for relatives and raising children.
Having at least next year will receive the minimum pensionable service for the full amount of the total pension, not part of it (in proportion to the length of service), as has been the case so far. For those recipients who have completed more than the required length of service (more than 30 years for pensions awarded until 31 December 2017), pensions will increase more.
Ministries scalculations show that in 2022 the average pension will increase from 450 euros to 465 euros; – from 519 Eur to 544 Eur. Average old-age pension with the required length of service in 2022 will increase to € 489 and in 2024 – up to EUR 576.
Why is it worth accumulating more experience?
The new pension model and the faster growth of the share of the total pension do not in any way eliminate the influence of the existing length of pension insurance on the total amount of the pension.
Už A larger individual part of the social insurance pension is planned. In other words, the pensions of those who have paid more social security contributions will increase.
With the change in the procedure for calculating pensions, in the future the contributions paid by a person will gain more and more weight in the pension, and the pension system itself will become fairer.
For example, a person who has worked for 18 years for the minimum wage acquires about 9 units of pension, while a person who has worked for 3 years for 3 average wages retires with about 108 units of account. The individual part of the pension for the first person is now around € 38 and for the second € 450.
As a result of the proposed faster growth of the pension unit, the individual part of the first person’s pension will increase by about € 13 over three years and the second part by € 152. The example clearly shows a greater effect for those who have paid premiums longer and higher.
When to expect higher pensions?
With the approval of the Seimas, pensions will be indexed faster from January 1, 2022.
The total part of the pension for recipients with less than the required length of service will be recalculated until 30 June 2022.
In other words, pension recipients who have been entitled to a new pension since 2022 will receive the recalculated pension and the resulting arrears for several months by the end of June at the latest.
–
