Pension insurance system
State Social Security
The first pillar works through the Fund “Pensions” of the State Social Security
The pension resources for today’s pensioners are collected mainly from the mandatory social security contributions of the working people. A pension from the State Social Security depends mostly on the number of insured people and the amount of their social security contributions on retirement. In addition, the amount of the pension depends also on the number of people who receive payments from the State Social Security at that moment. This is the solidarity principle of insurance - the working generation provides the retirement income of the non-working generation.
However, factors like the negative population growth, decrease of birth rate, unemployment, decreased rate of insurance contribution collection are among the ones that make a state pension insufficient to meet our needs after we retire. To this purpose, to the state pension we can add other forms of insurance – supplementary mandatory insurance and supplementary voluntary insurance.
Pillar 1 of the pension system is managed by the state. The Budget of the State Social Security is determined by the State Social Security Budget Act and is in force for one calendar year (from January 1st to December 31st). In the Act, the budgets of the several funds - “Pensions”, "Pensions Unrelated to Work", “Accidents at Work and Occupational Diseases”, “General Disease and Maternity” and “Unemployment” - are specified.
The overall amount of the insurance contributions for insured employees in 3rd category of labour for all insurance risks is 22.3% of the social security income (for persons born before 01.01.1960), and 17.3% for those born after this date, since 5% of their insurable income is directed to supplementary mandatory pension insurance.
Contributions to the State Social Security for employees born after 31.12.1959;
3rd category of labour; insured for all insurance risks
|Funds||At the expense of the employer||At the expense of the employee||Total contribution (%)|
|State Social Security||12.6% + % AWOD||<strong9.7%||22.3% + % AWOD|
|Fund “General Disease and Maternity”||2,1%||1,4%||3,5%|
|Fund "Accident at Work and Occupational Disease" (AWOD)||от 0,4% to 1,1%||-||от 0,4% to 1,1%|
|Supplementary mandatory pension insurance||2,8%||2,2%||5%|
|Total||17.4% + % AWOD||12.9%||30,3% + % AWOD|
Who has the right to a pension?
The right to a pension from the Fund “Pensions” is acquired when two conditions are met at the same time:
- Age – 63 years and 10 months for men, and 60 years and 10 months for women
- Length of service – 35 years and 2 months insurable period (i.e. 94 points) for women, and 38 years and 2 months insurable period (i.e. 100 points) for men.
From December 31, 2016 the retirement age for women increases from the first day of every calendar year - until December 31, 2029 - with two months of each calendar year, from January 1, 2030 - with 3 months each calendar year until reaching 65 years of age. For men the retirement age increases by two months - until December 31, 2017 - and from January 1, 2018 - with one month for each calendar year until reaching 65 years of age.