How to calculate pension amounts starting from 2022?
On January 1, 2022, the process of a gradual increase in the pension qualification age in Belarus was completed. Now the pension qualification age for men is 63 years old, for women – 58 years old. How are payments accrued to those who retire on pension now?
What types of pension are available in Belarus?
Article 4 of the Law “On Pension Provision” answers this question. All pensions are divided into labour and social ones.
Labour pensions include:
- old-age pensions – the main type which the majority of employees receive upon reaching pension qualification age, these pensions directly depend on the length of service and past earnings;
- disability pensions – these pensions are also labour pensions, they are assigned in connection with the loss of ability to work, in the presence of a certain length of service, according to Art. 27 of the Law “On Pension Provision”;
- pensions for those who have lost their breadwinner – here, as well, the length of service is taken into account, this type of pensions is described in Section IV of the Law “On Pension Provision”;
- long service pensions – this category is similar to labour pensions, however, it is assigned to employees related to the field of aviation, to athletes, some teachers, artists;for more details see section V of the law “On Pension Provision”;
- pensions for special services to the republic – the last and rarest type of labour pensions; they are assigned individually.
There are also special conditions for assigning labour pensions, for example, lowering the pension qualification age for mothers with many children, and others. In Belarus, there are also social pensions that are not related to work, social old-age pensions are assigned to men starting from 65 years old, to women – from 60 years old, writes Myfin.by.
What are the requirements for assigning an old-age pension?
The right to such a pension is granted to residents of Belarus who have reached the generally established pension qualification age, who previously worked and received income and paid insurance contributions to the Social Protection Fund.
The main indicators that determine the pension amount are:
- length of service;
- the amount of earnings;
- additional payments and benefits for difficult conditions and special merits.
The last point concerns harmful working conditions, for example, during mining; mothers with many children, and scientific degrees, etc. can be considered merit.
About the length of service
The length of service is the first basis for assigning a pension. It is calculated in two ways:
- pension insurance record – the time at which contributions to the Social Protection Fund were paid from the salary;
- total length of service – this also includes those periods for which contributions were not paid, for example, parental leave, military service, etc.
The minimum length of service required for assigning a pension on a general basis: 25 years for men, 20 years for women. The maximum length of service that is taken into account for calculating pensions is 45 years for men, 40 years for women.
The requirements for pension insurance record are different; in 2022, a person needs to have at least 18.5 years of service for both men and women. This minimum grows every six months, and in 2025 it will reach 20 years; no further growth is envisaged.
About average earnings
The employee’s income is the second basis for assigning a pension. According to Article 23 of the Law “On Pension Provision”, the old-age pension is set at an amount of at least 55% of the average earnings.
However, the case is not so simple: we are talking not about the actual past earnings of a pensioner in rubles but about the estimated value. Let’s remind that 5 – 10 years ago the salary in rubles was 2 – 4 times lower than now. If calculated directly, especially for those who retired earlier, pension amounts would be scanty. Therefore, the method of calculating coefficients from average earnings is used.
- the average salary in the country is BYN 1.000, the salary of an employee is BYN 700, the coefficient is 0.7;
- the average salary is BYN 1.000, the salary of an employee – BYN 1.200, the coefficient is 1.2.
The pension amount is calculated not from the past earnings, but from the current salary in the country. This salary is multiplied by the employee’s coefficient, and the resulting amount is used for further calculations.
How are pensions calculated?
This is the most important question, and it is not so simple.
Here are the main components for calculation:
- the current average earnings in the country;
- the coefficient of a particular pensioner;
- the minimum required insurance experience;
- the total length of service, including in excess of the minimum required;
- whether the pensioner continues to be employed or not;
- special conditions for calculating pension amounts for certain categories of employees.
When calculating, earnings are divided into parts. Up to 130% of the average is taken into account in full within 10% of the amount received; after, accounting is made with a 10% decrease. The calculation goes up to earnings of 500% of the average, i.e., a coefficient of 5.
An example for calculating a man’s pension: length of service – 40 years, the coefficient is 0.8, the average salary applied to calculate pensions now is BYN 1,113.01.
BYN 1,113.01 x 0.8 = BYN 890.41 – modernized pensioner’s earnings for calculation.
We take 130% of the average earnings, it turns out to be BYN 1,446.91, and from this amount we take 10%; so, we get BYN 144.69.
- BYN 144.69 х 0.9 (90%) = BYN 130.22;
- BYN 144.69 х 0.8 (80%) = BYN 115.75;
- BYN 144.69 х 0.7 (70%) = BYN 101.28.;
- BYN 144.69 х 0.6 (60%) = BYN 86.81;
- BYN 144.69 х 0.5 (50%) = BYN 72.35;
- BYN 22.27 х 0.5 (40%) = BYN 8.91.
The last estimated value of BYN 22.27 is obtained after subtracting 5 sums of BYN 144.69 from the modernized salary.
We get the amount of conditional earnings for further calculation:
- 144.69 + 130.22 + 115.75 + 101.28 + 86.81 + 8.91 = 660.01 rubles.
With the length of service of 25 years, the pension amount will be at least 55% of the current average earnings. For each year of the length of service over 25 years, up to 35 years, another 1% is accrued; and for those who have already reached the pension qualification age, for each year of the length of service over 35 years, another 1% is added, however, not less than 0.7% of the average earnings in the country:
- 660.01 * 0.65 (65% for the length of service of 35 years) + 1,113.01 * 0.7 / 100 (for the length of service over 35 years from the average the length of service in the country) = 467.96 rubles.
Hardly everyone wants to make such calculations. And if we remember about other details for accrual, then the calculation will be much more complicated. However, on the portal of the Social Protection Fund, in addition to other useful information, there is a calculator to calculate preliminary pension amounts. You just need to enter the pension coefficient, gender and length of service, and you can find out the approximate pension amount of the employee.