Tuesday, July 7, 2015

40 years seniority and well-deserved retirement? Yes, but the low – GazetaPrawna.pl

Introduction of professional experience as a criterion for early retirement will mean a significant reduction in monthly payments for people who will want to take advantage of such opportunities.

Retirement in younger age means a lower pension. Smaller importance for the amount of the benefit is the number of years worked. To show how this mechanism, we made a simulation for future retiree or pensioner, who have 40 years seniority contribution. That’s as much as propose trade unions and the PSL of a bill giving the possibility of early retirement.

In the first scenario, we assume that this person started working at the age of 20 years old and retired after 40 years of work, that is, as 60-year-old (Option 1). In the second, she went to work 5.5 years later and retires at the age of 65.5 years, which is beyond the current retirement age (Option 2). In the third variant we show the insured, who began working at age 20 and worked to complete 65.5 years (option 3).

What the replacement rate?

An insured person who has worked for 40 years (or will have dissipated full premium for this period – which is rare) if you retire at age 60 will have it by more than one fifth lower than if they did it on beyond the current retirement age (65.5). And at the same seniority. His replacement rate, ie the ratio of pension to final salary, will be 36 percent. While the person who finishes in the current retirement age and also worked 40 years, this relationship will be much better and will amount to 44 percent. And what about the third case? If our Kowalski worked for 20 years and had 45.5 years seniority, his replacement rate would be the highest and is expected to reach 49 percent.

How much on hand?

To show these differences, we achieved our calculation of the current national average, which is 4 thousand. zł. In this case, a man retiring at age 60 will get 1500 zł, its competitor also worked 40 years, but only after extracting the provision przekroczniu 65.5 years of age, will get 1760 zł. This means that within a year the benefit will be higher by a total of 3120 zł. Of course, the best situation would be the hero of the third version. Someone who began working at age 20 and has worked for the 65.5 years of age, will get 1960 zł pension. Within a year, his pension will be higher by a total of 5520 zł, than if they had finished work at the age of 60 years.

Why is that?

These results are the result of the shape of the current defined contribution scheme, in which the amount of the pension depends both on how much we put – that is how long we worked. But also on how we will live in retirement. The pension contribution amounts to 19.52 percent. our wages. Which means that a person working 40 years without interruption postpone your retirement account almost 94 of their salaries. On the other hand, someone who has worked for 45.5 years, 106 have time to put down wages. And now to calculate the replacement rate, divide the capital accumulated by the average life expectancy given by the CSO. For the person who is going to retire at the age of 60, it will be more than 21 years, or more precisely 261 months, so after splitting out the replacement rate 36 percent. Those who retire at age 65.5 years, would live according to GUS 213 months, ie. More than 17 years, which is the denominator is smaller, so the final result greater. Thus, much higher replacement rates in patients undergoing later retired.

2174 the amount of the average pension in the ZUS in 2014.

3182 the amount of the average pension in the ZUS in 2014 calculated according to the old rules

1975 the amount of the average pension in the ZUS in 2014. calculated according to the new rules

4.998 million pensioners many of ZUS pays benefits

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