1 October 2020 will mark pension and benefit indexation. Pension and benefits or their parts that do not exceed EUR 454 will be increased, as reported by Welfare Ministry.
This means all pension and benefit amounts, if they do not exceed EUR 454, will be increased. For pensions and benefits greater than EUR 454, indexation will apply to a portion of the provided amount – the aforementioned EUR 454, the ministry explains. The increase will depend on pension and benefit amount, as well as the applicable index. Exceptions include politically repressed persons, 1st group invalids and participants of Chernobyl nuclear power plant disaster’s clean-up efforts. These people will receive full pension indexation.
The goal of pension indexation is providing protection for pensions and benefits against decline of purchasing power and helping maintain their value.
This year retirement, disability and survivor pension and benefits will be applied with the index 1.0380.
Like in the past, this year’s retirement pension indexation will use different indexes depending on a person’s accumulated insurance period. The bigger the insurance period, the bigger the index used and the bigger pension increase a person can expect.
If insurance period is up to 29 years, pension indexation, without actual consumer price index, will also take into account 50% of insurance contribution amount’s actual per cent if the insurance period ranges between 30 to 39 and if pension is paid for work performed in a hazardous or particularly hazardous environment – 60%, if insurance period is 40 to 44 years – 70%, and if 45 years or more – 80%.
This means for people whose insurance period reaches 29 years, retirement pension review will use index of 1.0380; if insurance period is 30 to 39 years, the applied index will be 1.0446; if insurance period is 40 to 44 years, the applied index will be 1.0512. If insurance period is 45 or more years, the applied index will be 1.0578.
For example, if the retirement pension amount is EUR 350, a senior with insurance period up to 29 years will receive pension amount of EUR 363.30 (+EUR 13.30) after this year’s indexation, if insurance period is 30 to 39 years – the paid pension amount will be EUR 365.61 (+EUR 15.61), if insurance period is 40 to 44 years – the pension amount will be EUR 367.92 (+EUR 17.92). If insurance period is 45 years or more, pension amounts will increase to EUR 370.23 (+EUR 20.23).
Benefits for retirement and disability pensions for a single insurance period’s year accumulated by 31 December 1995 will also be indexed using actual consumer price index and 50% of insurance contribution increase amount. Indexation of benefits as of 1 October 2020 will use index for benefit amount of EUR 1.07 per insurance period year by 31 December 1995 and benefit amount of EUR 1.61 per insurance period year by 31 December 1995 if retirement pension is provided by 31 December 1996 or if disability pension is provided and retirement pension’s required age is reached by 31 December 1996.
This means the existing bonus amount, which is currently EUR 1.07 and EUR 1.61 per insurance period year, will be reviewed using index 1.0380. This means people who until now received EUR 1.07 per every insurance year accumulated by the end of 1995, will receive EUR 1.111, whereas those who received EUR 1.61 will receive EUR 1.67.
For example, a pensioner whose retirement pension amount is EUR 400 for 45 years of insurance period and a bonus of EUR 26.75 (for 25 years (from 45 years) by the end of 1995), will receive retirement pension of EUR 423.12 and a bonus of EUR 27.75 starting October 2020.
It is necessary to keep in mind that PIT will be withheld from the paid pension and bonus amount, reducing the paid amount of money.
Retirement, disability and survivor pensions and benefits provided or reviewed by 30 September 2020 will be indexed.
— to bnn-news.com