In 2024, there will be two changes to the pensions of retired elderly people: pension adjustments and pension recalculations. What exactly are these two changes, and which one is more cost-effective?

What is a pension adjustment?

In July, the pension adjustment for retirees in 2024 is about to be implemented. Currently, several provinces including Sichuan and Chongqing have already made up the pension shortfalls.

The adjustment of pensions for the elderly mainly follows the provisions of the Social Insurance Law, and timely increases the level of basic pension insurance benefits based on the growth of the social average wage and prices.

From 2005 to 2024, the state has adjusted the pensions of retirees once a year. Especially since 2016, the state has unified the adjustment of pensions for retirees from enterprises and government institutions. The overall adjustment level of the pension in 2024 is 3.0%, and compared with the price changes since 2023, it has only increased by about 0.2%, and the pension has been significantly improved.

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In recent years, the scope of pension adjustments has been limited to those who have retired and received pension benefits before December 31 of the previous year. Those who retired in December 2023 and started receiving pensions in January 2024 are generally within the scope of adjustment.

Since 2016, the pension adjustment has required the implementation of a combination of fixed amount adjustments, linkage adjustments, and appropriate inclinations. Generally, the proportion of increase for people with lower pension levels will be higher. Moreover, the proportion of pension adjustment will be inclined towards the elderly and people in remote and arduous areas.

For example, the 2024 pension adjustment plan in Hebei Province, the fixed increase standard is an increase of 32 yuan per person per month, the adjustment according to the payment period is an increase of 1 yuan per year of payment period for the basic pension, and the adjustment according to the pension proportion is an increase of 0.94% of the person's monthly basic pension in December 2023. For the elderly who are 70, 75, and over 80 years old by the end of the previous year, an additional 20 yuan, 30 yuan, and 40 yuan per person per month is added respectively. For retired personnel in remote and arduous areas, the additional increase standard is 15 yuan, 20 yuan, 25 yuan, and 30 yuan respectively.According to the pension adjustment plan mentioned above, for retirees who just retired in the previous year, if they have a contribution period of 40 years and a pension of 4,000 yuan, the increase in money would be 32 yuan + 40 yuan + 37.6 yuan, totaling an increase of 109.6 yuan. For retirees with a contribution period of 15 years and a pension of 1,000 yuan, the increase would be 32 yuan + 15 yuan + 9.4 yuan, totaling an increase of 56.4 yuan.

What is the recalculation of pensions about?

For retirees who have not participated in the pension adjustment this year, they should, in principle, use the social average wage of the previous year to calculate their pensions for this year. Some places also refer to it as the pension calculation base for that year.

Since neither the social average wage of the previous year nor this year's pension calculation base has been announced, all retirees since the beginning of this year have been using the social average wage and pension calculation base of the previous year from 2023. Once these figures are announced, the pension will be recalculated.

Based on the announcement schedule of previous years, the pension calculation base is usually announced by various regions around November, and the recalculation of pensions is carried out around December.

For example, using the hypothetical situation mentioned above, for a retiree with a basic pension of 4,000 yuan and a working age of 40 years, only the basic pension and transitional pension, which are linked to the social average wage or pension calculation base, are part of the pension calculation formula. If the sum of these two parts is 3,500 yuan, once the new annual calculation base is announced, these two parts of the benefits will increase proportionally.

Looking at the changes in the pension calculation base between 2022 and 2023, the growth rate of the calculation base for that year is the average pension growth level plus 0.2 percentage points (unless the local comprehensive social average wage growth rate is relatively low). According to the pattern, the growth rate of the pension calculation base for 2024 is 3.2%.

Therefore, the recalculation of pensions would increase the pension by 112 yuan, which is roughly the same amount as the increase during the pension adjustment period.

However, for a retiree with a contribution period of 15 years and a pension of 1,000 yuan, assuming the basic pension is 800 yuan, in this case, the increase would only be 25.6 yuan. Thus, it can be said that those with lower pension levels receive more consideration when participating in pension adjustments.In summary, it is indeed the case that pension adjustments and pension recalculations are not the same thing, and they follow different rules. For individuals with lower pensions, it is more advantageous to have an annual pension adjustment. #Top Headline Creation Challenge# #How is the pension specifically adjusted in 2024#