This is indeed a concern for many people. Below, I will combine policies, regulations and specific cases to analyze it in detail for you.
1. The pension system in the past.
China's pension system has undergone an important change from the seniority system to the personal account system.
At the beginning of the reform and opening up, the state implemented a pension calculation and payment system based on the grade of seniority. This system clearly stipulates that when the length of service reaches a certain level, the pension treatment is fixed at a level of that grade. For example, 90% of the salary can be paid for 35 years of service, and 90% of the salary for 40 years. The difference between different service years is 5 years.
This system emphasizes working hours and encourages employees to work continuously to accumulate seniority. However, it also has certain problems:
1.Ignoring the actual contributions of individuals and determining treatment based on seniority alone is not fair enough;
2.There are large differences in the wage level in different years and regions, and there is also injustice in calculating pensions according to the proportion of wages;
3.Workers are not highly motivated to contribute, and there is also a lack of regulation.
With the economic and social development of our country, this system has gradually revealed more unsuitable places, and there is an urgent need for reform and innovation.
Second, the new era of personal account pension system.
Since the mid-90s of the 20th century, China has successively implemented the personal account pension system in the fields of enterprise employees, urban employees, government agencies and institutions.
The core elements of the system are:
1.The implementation of individual payment is fully linked to treatment, and the more payment and the longer the payment time, the higher the level of treatment.
2.Establish a personal account for employees, pay and record on a monthly basis, and the funds in the personal account can only be used to pay their pensions.
3.At the time of retirement, the individual's pension benefits are calculated according to the personal account savings, the number of years of payment and other factors.
In this way, a direct link between payment and entitlement is established. The enthusiasm of individuals to pay fees has increased significantly, and the discipline of payment has also been strengthened. It is in stark contrast to the seniority grade system in the past.
3. What is the difference between a pension of 35 years and a pension of 40 years.
For example, Mr. Zhang and Mr. Li were both born in 1964 and have no record of interrupted contributions.
Mr. Zhang has worked for 35 years and will retire in 2024. Mr. Li worked for 40 years and retired in 2029.
According to the personal account system, Mr. Zhang has paid less than Mr. Li for 5 years, which will directly affect the pension income of the two.
Basic pension.
The basic pension is linked to the number of years of payment, and the basic pension will increase by a certain percentage for each additional year of payment. In the same city, Zhang and Li have similar social security bases, so Mr. Li's basic pension will be about 500 yuan higher than Mr. Zhang's per month.
Personal account pension.
The personal account pension depends on the amount of personal contributions and the accumulated savings in the account. Mr. Li has paid 5 years more than Mr. Zhang, and even if he pays on the same base, the balance of his personal account will be higher. The difference in pension for this part is about 300 yuan.
Transitional pensions.
The transitional pension is linked to the previous length of service. Mr. Li has been more than Mr. Zhang for 5 years, and the transitional pension will be about 200 yuan higher than Mr. Zhang per month.
On the whole, under other similar conditions, Mr. Li's pension income will be about 1,000 yuan higher than Mr. Zhang's per month.
This fully shows that under the new system, the difference in length of service will bring about a significant difference in pensions. It is no longer the same grade as the past 35 and 40 years.
Fourth, how to make full use of the new system to ensure retirement life.
In the face of the new system, everyone needs to plan ahead to ensure a standard of living in retirement.
Choose a reasonable payment level. Do what you can and don't choose a higher payment bracket than you can afford.
Timely and uninterrupted payment. Ensure continuous payment records in your personal account.
Strengthen investment management. Rational use of personal account funds to obtain better investment returns.
Increase earning capacity. Legally increase the remuneration for work and lay the foundation for contributions.
Pay attention to value preservation. Pay attention to the base adjustment at any time to ensure the payment and value preservation.
Multi-party preparation. In addition to pension insurance, it is also necessary to use commercial insurance, savings, investment and other ways to increase retirement income.
Under the new system, we must change our thinking and no longer simply predict retirement income based on years of service. It is necessary to make full use of the advantages of the personal account of pension insurance, and make long-term preparations from now on, so that after retirement, you can really reap a rich pension and live a happy life.