Voluntary pension insurance - everything you need to know

Types of pension insurance

Domestic pension insurance was created according to an already established model and has two types:

1. Mandatory (when at a certain stage of life citizens begin to receive a state pension).
2. Voluntary (it is also called non-state or additional).

About compulsory pension insurance

Compulsory pension insurance today is implemented with the help of the Pension Fund, which acts as an insurer. But the insurers are citizens or organizations that hire people and, at the same time, make regular accruals and payment of contributions. Those persons who are covered by the current pension insurance are considered insured.

Components of a labor pension

The modern pension insurance system is structured in such a way that for each pensioner the labor pension consists of three components:

1. Basic
2. Insurance
3. Cumulative.

The basic part is formed from the federal budget, and the insurance and funded part is formed from insurance contributions that employers transfer to the Pension Fund.

State pension

In addition to the traditional scheme on which pension insurance is based, there is a special state pension. This is insurance for pensioners of special categories:

• Federal civil servants
• Disabled citizens
• Military
• WWII veterans
• Victims of disasters (man-made/radiation).

Pension insurance for these categories is provided with funds from the federal budget.

Additional payment to pensions for mothers and fathers with many children

One of the parents with many children - mother or father - can receive an additional payment to their pension if they meet the following criteria:

• presence of 5 or more children;
• reaching 50 years of age;
• total work experience - at least 15 years.

According to the law, the source of payments is funds not from the federal, but from regional budgets. Accordingly, the amount of the surcharge is determined by the region in which the payment is assigned.

To consider an application for the corresponding payment, you must contact the Pension Fund branch at the place of registration.

About voluntary pension insurance

In addition to mandatory insurance, there is also insurance for pensioners on a voluntary basis to ensure life after working age (it is also called non-state or additional). To provide this type of service, a sufficient number of non-state PFs have been created. For our country, this practice is quite new, but abroad voluntary pension insurance has already become a good tradition. There it is considered quite normal to provide for your old age throughout your life. Moreover, the contract can be concluded precisely on such conditions that will be most convenient in each specific case. You can regulate deposits (their amount and frequency of depositing) yourself.

Voluntary insurance mechanism

Insurance on a voluntary basis is a special savings system. Life insurance according to this principle is extremely simple. According to the concluded agreement, at a certain stage of life, the citizen transfers a certain amount to the insurance company for his own pension provision in the future. In turn, the company begins to actively invest the funds received from the policyholder, thus increasing their initial volume. When the client reaches retirement age, the insurer pays an additional pension in his favor.

What programs are there for retirees?

Today, the insurance market for pensioners is quite diverse, so citizens can choose the policy that will truly suit all parameters. Thus, contributions to a non-state pension fund are of two types:

• One-time insurance premium
• Cumulative insurance premiums.

In turn, for savings contributions you can choose the appropriate frequency of fund transfers:

1. Monthly
2. Quarterly
3. Annually
4. Semiannually.

The accumulation period can also be different - up to 99 years. Pension insurance benefits can also be paid as a one-time payment or at a frequency specified in the contract (for a previously agreed period or for life). These points are undoubted advantages, because citizens are free to make their own choices and have the opportunity to regulate their financial security when they have the opportunity.

The activities of non-state pension funds are regulated by a special law on pension insurance. Thanks to this, the development of insurance at large enterprises and corporations, for which previously pension insurance was a very vague prospect, has rapidly increased.

Objectives of pension insurance

Insurance for pensioners is designed to provide a decent standard of living for older people. It would be ideal if pension provision would provide the opportunity to live at the same level as before going on a long-awaited and well-deserved vacation. Unfortunately, this is not the case yet. Despite regular increases, the pension grows to the level of the average salary quite slowly, not even reaching the 50% barrier.

It is precisely in order to correct the situation that a voluntary insurance program for pensioners has been developed. Where the state still lacks funds, it is possible to take care of the future standard of living in advance.

Pension insurance - what is it?

Pension provision in our country is represented by two types:

• compulsory;
• voluntary.

In the first case, citizens are provided with certain financial support at the expense of the Pension Fund of the Russian Federation or the federal budget. However, these payments most often are not able to satisfy all urgent needs. To obtain more substantial payments, voluntary pension insurance programs are used.

More information about insurance and compulsory pension provision can be found here.

Pension insurance is a type of insurance in which a person is guaranteed pension payments in exchange for paying an insurance premium (one-time or periodic).

In addition, there are a number of programs designed specifically for retirees. They are aimed both at organizing decent financial security upon reaching a certain age, and at providing quality medical care if necessary.

The most common of them are:

• endowment life insurance (NCL);
• health insurance (VHI).

IMPORTANT! The NSL allows you to provide additional income to the insured and protect the financial interests of relatives in the event of his death.

NJ can be considered as a guarantee of additional pension provision, since it ensures the formation of a certain capital by the time the age specified in the contract is reached. Upon reaching it, the insured may be paid the entire accumulated amount and interest accrued on it. In this respect, such programs are similar to bank deposits, but are concluded for longer periods.

The duration of the NSW program can vary from 5 to 30 years. In case of premature death, the entire amount of the insured amount will be received by the beneficiary specified in the contract (usually one of the relatives).

Article on the topic: Pension insurance and compulsory insurance

IMPORTANT! The agreement may stipulate that you will receive the entire accumulated amount upon reaching a certain age or that you will receive payments in installments similar to a pension.

At the same time, insurers offer various additional conditions that the policyholder chooses. Thus, some programs provide exemption from contributions in the event of a serious injury and disability. In this situation, regular payments will be made by the company. Sometimes it is envisaged that a payment will be made to the policyholder if he is diagnosed with a serious illness.

Purchasing a VHI policy is an excellent opportunity to receive quality medical care for the elderly, in excellent conditions and without exhausting queues. Such agreements are developed specifically taking into account the specific health of older people. Particular attention is paid to the prevention of heart and vascular diseases.

A standard VHI agreement includes the following services:

• consultations with a therapist and specialists;
• carrying out laboratory and instrumental research;
• receiving physiotherapeutic procedures;
• issuing certificates and prescriptions;
• urgent hospitalization.

What you need to know before buying insurance

There are certain features of the private insurance policy that must be taken into account before purchasing a policy:

• All responsibility for payments lies on the shoulders of the company with which the contract is concluded, and the amounts paid are not insured by the deposit insurance agency. Thus, it is worth choosing reliable and proven companies for insurance.
• Some agreements do not provide for the receipt of investment income, but provide only a return of deposited funds and a minimum guaranteed income.
• The conditions of some programs provide for payments for various risks: upon receipt of disability, diagnosis of diseases, etc.
• Each company sets its own conditions for early termination of the contract. It is necessary to study what they are and what will happen if you want to cancel the policy. The amount of the refund may vary.
• When insuring life insurance to ensure pension payments, you can independently set the age at which they will begin.

When deciding to buy a voluntary health insurance policy, you should pay attention to the following features:

• The VHI agreement does not provide coverage for the treatment of chronic diseases.
• Companies provide insurance to people up to a certain age, which may vary from one organization to another.
• The cost of insurance depends on the age of the client and the number of services included.
• In some cases, you will need to undergo a medical examination to conclude a contract.

Article on the topic: Features of compulsory health insurance and compulsory medical insurance

Or maybe it's better to put the money in the bank?

For our country, insurance on a voluntary basis is not yet as common as in foreign countries. It is much more common for our citizens to entrust money to a bank. In practice, it turns out that bank deposits bring rather modest dividends, which means that, taking into account inflation, funds set aside at a certain stage of life may not justify hopes for a comfortable existence in the future.

The insurance company, on the contrary, significantly increases the amount of the deposit, which makes it possible to ensure a comfortable old age. All world experience confirms the benefits of this type of insurance. It is voluntary insurance for our pensioners that allows us to independently determine the amount of security at that stage of life when it will be difficult to work.

Another important point is that non-state pension insurance allows the insured person to independently determine the time when the provision will begin. This means that you can start receiving a non-state pension even before the policyholder reaches retirement age. Under certain circumstances, you can also receive the entire amount that has accumulated at once.

How to receive a supplement for minor children in care?

Only one parent of retirement age can receive the supplement for minor children in care.

If you retired before 2020, you must submit an application:

• when contacting the Pension Fund in person;
• through “State Services”;
• through the MFC;
• by sending a letter by mail.

In this case, the pensioner needs to collect a package of documents, make an appointment with the Pension Fund and come there at the appointed time with documents and their copies to write an application. The application review period is up to 10 working days.

List of required documents

Before scheduling a visit to the Pension Fund, you must prepare the following documents:

• passport;
• birth certificates of each child;
• pensioner's ID;
• pension book;
• SNILS;
• any document confirming that the child is one and a half years old (for example, a passport);
• a document confirming that the second parent does not receive additional payment;
• copies of Russian passports of each of the children;
• certificate of family composition;
• application of the established form.

ATTENTION! The application form can be downloaded from this link.

About health insurance

Among the mandatory types of insurance in Russia are not only pension insurance, but also medical insurance. In our country, medical care is provided only if you have a special insurance policy. Such life and health insurance is a special system through which policyholders receive medical care. Like pension insurance, health insurance is compulsory.

The bulk of the funding required by health insurance for working people and retirees comes not from contributions from citizens themselves, but from transfers made by organizations and enterprises.

Disadvantages of Health Insurance

If pension insurance provides at a certain stage in the life of each pensioner, then medical care under the insurance has a certain list of services. If any of the necessary services was not provided, it must be paid additionally.

Also, not everyone likes the fact that, like pensions, modern health insurance is completely controlled by the state. It is government agencies that predetermine the amount of insurance costs for this type of policy.

About voluntary health insurance

In addition to compulsory, there is also voluntary medical insurance. The principle of its operation is similar to that of non-state pension insurance. The insurance amount is specified in the contract in advance; it depends on the degree of risk in a particular case and insurance premiums. When there is a threat to the health or life of the policyholder, health insurance will help cover the necessary expenses. It is important that these insurance benefits do not have to be used only for medications. The funds are spent at the discretion of the victim.

It turns out that voluntary insurance contracts make it possible to compensate for the shortcomings of mandatory policies, allowing citizens to regulate the level of their own protection depending on individual needs.

Fixed supplement to pension for dependents

Pension supplements are provided to pensioners who have dependents and bear the costs of their maintenance. A fixed amount is assigned until dependents reach the age of majority or complete full-time education.

REFERENCE! If a dependent child has been disabled since childhood, payments are due even after he reaches the age of 18.

Who is considered a dependent for the purpose of calculating additional payment?

Officially recognized as dependents:

• relatives and adopted children of the pensioner;
• minor brothers or sisters if their parents are absent or missing;
• grandchildren whose parents have died or been deprived of parental rights;
• other categories of minors transferred by guardianship or guardianship authorities to the care of a pensioner.

Not only minors can be dependents. The exception is children with disabilities since childhood and dependents who meet all the criteria:

• study at a university or college;
• undergo full-time training;
• enrolled in an educational institution on the territory of the Russian Federation;
• have not reached 23 years of age.

Also, a person who studies at a foreign educational institution under a partnership agreement between countries will be considered a dependent until the age of 23.

Amount of surcharge

The amount of additional payment to the pension for a dependent is determined as 1/3 of the fixed payment to the insurance pension.

In 2020, the fixed payment amount is 5,686.26 rubles; accordingly, for each dependent (but not more than three), a pensioner can receive 1,895.42 rubles. There are no allowances for the fourth and subsequent dependents.

The amount of the surcharge changes annually. So, in 2021, one dependent will receive 2,014.83 rubles, in 2022 - 2,133.71 rubles, in 2023 - 2,253.19 rubles, in 2024 - 2,377.12 rubles.

Accrual conditions

According to Part 3 of Art. 17 of Law No. 400-FZ, only pensioners who receive old-age and disability insurance pensions can receive an allowance for dependents. The supplement is due for minors or dependent students until they reach the age of 23.

If both parents of a minor or an adult full-time student are pensioners, both may qualify for an increase.

Recipients of social pensions - those who have not accumulated the required length of service or IPC cannot receive payment.

Pensioners of military departments can receive a bonus, but it is calculated differently. The amount of the allowance in this case was approved by Federal Law No. 4468-1 dated February 12, 1993.

Bottom line

Insurance is quite a powerful help for each of us, especially pension and medical insurance. Even if the compulsory insurance system is not perfect, it gives citizens confidence in the future. To make stability in life even more tangible, there is voluntary insurance, thanks to which everyone can additionally protect themselves for all occasions. You should not avoid insurance companies; in other countries they have long become guardians of both physical and financial security.