In October 2024, the 10-year transitional period for the calculation of pension funds in government and public institutions as stipulated by the state is about to come to an end. Some friends believe that after the end of the transitional period, the calculation of pension funds will usher in a "convergence." What is the reality?

What are the differences between the new methods for calculating pension funds for government and public institutions after October and the methods used by enterprises?

In fact, there is no difference between the new method for calculating pension funds for government and public institutions after October 2024 and the method used before September 2024.

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The pension calculation formula mainly includes the basic pension, personal account pension, and transitional pension. The occupational annuity, as a supplementary pension calculation formula, is calculated separately, but the calculation method is similar to that of the personal account pension. The specific calculation method is as follows:

① Basic pension = Pension payment base of the year of retirement × (1 + average contribution index of the individual) ÷ 2 × contribution years × 1%.

② Personal account pension = Balance of the individual's social insurance account ÷ Number of months determined by the retirement age for payment.

These two parts of the pension calculation formula are actually the same as the pension calculation formula for enterprise retirees, and they are also the same nationwide.

However, the difference lies in the fact that each province uses a different payment base for calculating pension funds, and even a single province may have several payment bases. For example, in Shandong Province, the payment base used for calculating pension funds for government and public institutions and most enterprises in 2023 is 7,468 yuan, but for provincial enterprises, it is 7,682 yuan, and for Heze enterprises, it is 7,069 yuan. In places like Shanghai, the pension payment base has been unified to 12,183 yuan (full range of social average wages).In addition to the base pension calculation factor, there is also a significant difference in the average contribution index. The average contribution index for enterprises is equal to the average of the contribution index over the calculation period stipulated by the state, which is the actual average contribution index, generally referring to the contribution period after 1996. For government and public institutions, the average contribution index is an average that includes both the deemed contribution period and the actual contribution period.

For government and public institutions, assuming the actual average contribution index is 1.4 with a contribution period of 10 years; and the deemed contribution index is 1.6 with a deemed contribution period of 20 years. Thus, the average contribution index equals (1.4 times 10 + 1.6 times 20) divided by 30, which is approximately 1.533.

As for the contribution period, the requirements for both enterprises and government and public institutions are the same, encompassing the entire contribution period including both the deemed and actual contribution periods.

Regarding the personal account pension part, government and public institutions began to accumulate from October 2014, while enterprise employees have a longer accumulation period. However, the accumulation ratio is uniformly based on 8% of the contribution base. Since the contribution base for many enterprise employees and flexible employment personnel is relatively lower, the accumulation amount does not differ significantly.

The transitional pension for government and public institutions is calculated as the deemed contribution index times the deemed contribution period times the pension calculation base of the year of retirement times the locally stipulated transitional coefficient.

For the transitional coefficient, a unified standard is generally implemented for both enterprises and government and public institutions. However, the main difference between the two lies in the deemed contribution index. The deemed contribution index for government and public institutions is calculated based on a combination of the individual's position level, job salary grade, and retirement living allowance at the time of retirement, with the index generally being higher for higher positions. Even a promotion before retirement can lead to an increase in the deemed contribution index.

But for enterprises, the deemed contribution index is not influenced by positions since administrative levels have long been separated. In many places like Beijing and Shanghai, the deemed contribution index is calculated as 1, while in Shandong and Hebei, it is calculated based on the actual average contribution index.

Finally, government and public institutions have an occupational pension, with an accumulation amount that is even higher than that of the personal account. For many enterprises, an enterprise pension system has not yet been established, and those that have established it are mainly large state-owned enterprises and central enterprises.

In summary, after October 2014, the calculation of pensions for enterprises and government and public institutions remains different. However, the principle of receiving more for more contributions and longer contribution periods is the same.Enterprise employees who make contributions based on the same base amount after October 2014 will receive the same basic pension excluding occupational annuity. #Top Headline Creation Challenge# #Government and Public Institution Pension#