7 October 2022, Friday, 22:35
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Pension-Related Innovations Are Questionable

Pension-Related Innovations Are Questionable

How quickly will inflation eat away at pensioners' savings?

Since October 1, employees will be able to pay an insurance contribution for an additional funded pension - up to 10% of their salaries. In this case, the employers will have to transfer to this account up to 3% more. And there is a nuance: the employer must transfer the same percentage as the employee, but not more than 3%. For example, if a company specialist decides to contribute 2% of his salary to an additional pension, the same amount must be added by the employer. If the employee chooses a 5% rate, the employer will "add" the maximum 3%, zerkalo.io writes.

In this case, the employer will transfer money to the employee's additional pension from the mandatory insurance deductions. Let us recall that now the majority of employers contribute 34% of the employee's salary - 6% of payroll goes to various benefits, 28% - pension insurance.

The Ministry of Labor was skeptical about the pension reform, which is introduced on October 1. The key issue was about who would reimburse the "dropped out" mandatory insurance premiums, which the employer is expected to send to the funded pension.

"The state, of course, under-receives. There is a drop-out income, clarified Stravita. - They (depending on the need) will be reimbursed by the national budget, when an employee, for whom an employer allocates part of the contributions to a personal account, will make a regular pension in the pension system. It will be calculated by the same standards as for all others. This is the state co-financing.

The budget of the Social Security Fund that pays pensions and benefits has a hole for more than a year. It requires annual inflows of subsidies from the state budget. Aliaksandr Lukashenka has previously stated this. The Ministry of Labor and other relevant agencies fail to solve this problem.

Where the money transferred by employees for the second pension shall be kept

"Contributions are accrued and accumulated on a personal account, unlike the social security fund," clarified the Stravita insurance company. It will be used to allocate money for the additional pension. - Subsequently, these funds are placed on market conditions in deposits and securities. It allows to protect funds from inflation.

The yield under the contract of funded supplementary pension insurance is going to be set at the refinancing rate. "The procedure for accrual and distribution of additional yield (insurance bonus) will be set by the insurer in coordination with the Ministry of Finance," the insurance company explained. To put it simply, those who choose the insurance for a second pension will receive the same rate of return as the refinancing rate, which is now 12% per annum. However, this interest rate will not protect savings from inflation if it continues to stay at the same level as it is now. Let us remind you that annual inflation was 17% in May.

Who will be denied supplementary pension insurance

Individual entrepreneurs and the self-employed, as well as workers whose employer is in the process of liquidation or bankruptcy, will not be able to participate in the pension program. Unemployed workers also won't be able to enroll, nor will those who are less than three years away from retirement. Employees whose employers do not pay contributions to the SSF will also not be eligible for this pension program.

"Policemen and military men make no contributions to the Social Security Fund, therefore, they cannot take part in this program", specify the insurers.

Is it possible to receive a salary in rubles and save in dollars?

No, you can't. "The savings for the "second pension" and the payments are made in Belarusian rubles," specify Stravita.

Is it possible to cancel the insurance before retirement and get my money earlier?

- If one stops paying the insurance contribution, the amount accumulated during this period is frozen, but it continues to accrue the yield and bonus. However, one can get it only when reaching a stipulated retirement age or in the event of adverse events, for example, disability group I or II, the insurance company specifies.

In this case, one will not get this money even if one gets an early retirement. "The payment is made only when one reaches the stipulated retirement age, the insurance company adds.

What happens to the contributions if one loses a job?

"If a person who has signed an insurance contract loses a job, the payment of insurance contributions is suspended," the insurers explain. - When the situation with employment is resolved, one needs to write an application for the payment resumption." The company does not mention penalties.

Can an employer opt out of the program?

- No. "The employer has no right to refuse to participate in the insurance," the insurance company specifies. That is, if an employee wants to make contributions, an employer must do it as well.

Can an employee change the amount of contributions to the second pension?

- Yes, one can. "During the accumulation period, a participant in the program can adjust the rate once a year and change the percentage of contributions," the insurers explain. - Someone will start with the "3+3" program. At some point, one may contact the insurance company and increase deductibles. Or vice versa, if initially a higher rate was chosen, one can reduce it".

Some Belarusians have already signed up for supplementary pension insurance. What will happen to them from October 1?

Officials plan the pension contracts, which the Belarusians have already drawn up with insurance companies through employers or on their own, will remain. However, about 5% of the employees use such an option. The Ministry of Finance has previously cited the fact that "a series of devaluations has undermined confidence in financial instruments," among the reasons why Belarusians do not rush to sign up for such insurance. How the Belarusians should gain optimism and trust now is an open question.

When will one be able to receive the saved money?

These funds can be received either within five or ten years, as one chooses. One can do this only after retirement age. Today, it is the age of 63 years for men, and 58 years for women.

Is it possible to inherit such a pension?

The Ministry of Labor previously reported that "the possibility of inheriting an accumulated pension is provided".

But earlier Minister of Labor Irina Kostevich, speaking of the inheritance of such a pension, made a reservation - "if it is crucial".