# The value of the individual pension coefficient (PKI) - what is it? Formation of an insurance pension

Starting from 2015, the procedure for calculating pensionshas changed. Now the accrual of cash payments according to the work experience of a citizen is made taking into account the PKI, that is, the individual pension coefficient is calculated, on the basis of which the person will receive this or that money monthly. Such a system has long existed in the West and in Europe. However, if for the residents of these countries the procedure is quite understandable, then the Russians are not yet fully aware of this program.

## The value of the individual pension coefficient (PKI): what is it?

Previously, in order to start receiving a pension,The citizen had only to indicate his experience and to confirm it documentarily. But since 2015, future pensioners can independently regulate their retirement income. For this purpose, the pension is divided into several parts: the funded and the insurance. The latter can be fixed and calculated.

In this case, the citizen must meet several important parameters:

- Have an insurance record of at least 15 years.
- To reach the retirement age.
- Provide data that confirm that the pension coefficient was at least 30 points for the entire length of service.

Speaking about the size of the individual pensioncoefficient (PKI), what it is and "with what it eats", it is worthwhile to understand that this amount is calculated in points that are calculated each year, based on the level of wages and income of the pensioner. In turn, according to the scoring system, the length of service and the level of wages are taken into account. Until 2014, this indicator also depended on the amount of contributions to the tax service.

Accordingly, to date, if a citizen received in 2017 more income than in 2016, then the individual pension coefficient (pension score) will be higher.

Also it is worth considering that from 2015 to 2025a special transition period is envisaged. This means that the conditions for calculating pensions will be tightened each year, the value of the scores calculated will grow according to inflation and economic indicators in the country.

To better understand the concept of the value of the individual pension coefficient (PKI), what it is and how it is charged, it is worth considering in more detail several important aspects. This and do.

## What is the insurance part of a pension?

This concept means the conditions for calculating future pension benefits. At the same time, the pension equation is completely excluded. And this has a positive effect on its growth.

If we talk about what it is (insurancepart of the pension), then it is worthwhile to understand that this amount is constantly changing depending on the salary of the future pensioner. Also, its size depends on the total length of service and the amount of deposits carried out by a citizen in the process of conducting work.

The insurance part of the pension - what it is and from whatis it formed? In the process of accrual of this part of the pension payment the algorithm of insurance cases is used. These include the way to a well-deserved rest. The main condition for such an insurance case is the age of the person.

To date, men over the age of 60 and women who are 55 years old can count on retirement.

## How to increase the percentage of the insurance part of a pension

To increase the amount of individual pensioncoefficient, and accordingly, and the volume of insurance, it is necessary to receive a "white" salary throughout the entire work activity. This means that for the whole period of work, certain interest should be charged to the state's account, which in the future will be taken into account when determining points for a particular citizen.

As a rule, up to 22% of the PEP is usually applied to future pensions.

## What else does PKI depend on

Continuing to consider the concept of magnitudeindividual pension coefficient (PKI), what it is and how it is calculated, it is worth considering not only the amount of wages, but also other aspects. For example, as mentioned earlier, insurance premiums for different citizens may differ depending on the distribution of the funded and insurance part of pension payments. At somebody they make 6%, and at some people they reach 16%.

Also, when making calculations,life circumstances of the future pensioner. If he served or continues to serve in the army or is forced to look after young children or incapacitated relatives, the PKI can be increased. Today the state has created a lot of special programs for such cases.

## How is the annual PKI calculated?

Even before 2015, the government drafted an individual pension coefficient formula that looks like this: PC = MF / C, where:

- PC is the total amount of pension points of a particular citizen.
- MCH is a part of the insurance (taking into account the deduction of the fixed and funded part of the pension).
- C represents the cost of the PKI at the time of calculation.

According to this formula, it is fairly easyindependently calculate the amount of accumulated points. Accordingly, in order to know what kind of pension compensation a citizen expects, it is not necessary to contact the FIU. The only thing that needs to be clarified is the benefit rate, which can be 6%, 10% or 16%.

To calculate HIPC yourself, the following equation should be used: HIPC = (CM / MW) * 10, where:

- SM will represent the payment of fees for the selected tariff (in percent).
- MV is a fixed level of payment, which is 16%.

Due to this equation,how many points the future pensioner could accumulate for all his work. If the citizen refuses the accumulative component of pension payments, he can partially increase the annual rate. Accordingly, the amount of the benefit itself will be higher.

As mentioned earlier, the higher the scorepensioner, the greater will be the share of payments. However, it is worth considering that there is a maximum PKI (individual pension coefficient), which is 7.38 points. To receive it, within a year the citizen should receive the maximum ZP.

## Calculation example

To make it easier to understand all the subtletiesIPK, we will consider an example. Let's say a certain citizen decided to calculate on her own how many points she had already accumulated for her work activity and how much she still needed in order to receive a monthly payment of 25,000 rubles.

The fixed part of the insurance pension is usually 4559 rubles. In this case, the woman is entitled to a pension benefit equal to 18,300 rubles.

Accordingly, the amount of payments for the future pensioner will be 13,741 rubles (we deduct from 18,300 fixed insurance part).

To calculate the PKI, divide 13 741 by 74.28 andwe get about 185 points. This is the required quantity. If you make several reverse calculations, it is easy to find out that in order to receive 25,000 rubles a month the pensioner must accumulate another 90 points.

## How much does the PKI cost

By and large the cost of this indicatoris a specific number that is determined by the state annually. For example, in 2015, the PKI was equal to 64 rubles, and in February 2016, due to the general inflation rate, this figure rose to 74 rubles. In the current year, the cost of this coefficient is 78 rubles with kopecks.

If a pensioner earns a higher PKI, only the highest possible figure will be taken into account.

## Finally

Undoubtedly, for every pensioner it seems thatan independent calculation of future payments is a very complicated procedure. In fact, everything is not so scary. The main thing is to learn how to use the necessary formulas and determine the percentage ratio of parts of a pension. If necessary, you can visit the Pension Fund and ask for a preliminary calculation of pension benefits.

Nevertheless, it is worthwhile to understand that the situationconstantly changing. Perhaps in a few years the calculation of pensions and their indexation will be made by other formulas. However, working experience will always be an invariable component of this type of benefits.