A friend asked today, why is there such a big difference in pensions between retired personnel from enterprises and institutions? Is there a difference in their contributions?

What are the differences in pension insurance contributions between employees of institutions and enterprises?

In fact, since October 2014, both enterprise employees and employees of institutions and public institutions have adopted the same contribution model, where the individual bears the personal contribution part, and the unit bears the unit contribution.

The contribution base for enterprise employees is, in principle, calculated based on the average monthly total wages of the previous year. The total wages generally include six major parts: hourly wages, piece-rate wages, bonuses, allowances and subsidies, overtime pay, and wages paid under special circumstances.

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The contribution base for employees of institutions and public institutions mainly includes basic wages, performance wages, and allowances and subsidies stipulated by the state. However, some reform-oriented subsidies and reward-oriented subsidies are not included in the personal contribution base.

Relatively speaking, the upper and lower limits of the contribution base must comply with local regulations. It is generally determined based on 60% to 300% of the average total wage of urban unit employees in the province for the previous year.

The contribution ratio is 8% of the contribution base borne by the employee, and 16% of the contribution base borne by the employer. The unit contribution base is generally the sum of individual contribution bases.

For flexible employees without a unit, who participate in the basic pension insurance for enterprise employees, they can freely choose whether to make contributions and freely choose the contribution base between the upper and lower limits. Indeed, many flexible employees choose to contribute at the lowest base for 15 years, waiting to receive their pensions. This also to some extent lowers the pension level of enterprise retirees.

The basic pension insurance for enterprise employees was only fully established in 1992. Before that, only state-owned collective enterprises had corresponding service years that could be calculated for continuous contributions. Most enterprise employees started to participate in insurance and contributions later, and some enterprises did not pay social security for employees according to the stipulated base, and there were even cases of not paying social security at all. Short contribution years and low contribution bases have also affected the pension level of enterprise retirees to some extent.Are there differences in the calculation of pension for employees of enterprises and institutions?

In fact, there are complex historical factors behind the differences in retirement pensions between enterprises and institutions. Although institutions began to pay for social insurance from October 2014, there was a retirement system in place before that. For the years of contribution before that, the pension benefits were mainly calculated through the basic pension plus transitional pension.

After the implementation of the social insurance system reform, the pension formula generated by contributions from both enterprises and institutions uses the same pension calculation formula, which mainly includes the basic pension and the personal account pension. The specific calculation formula is as follows:

① The basic pension is equal to the social average wage of the year before retirement × (1 + the average contribution index of the individual) ÷ 2 × the number of years of contribution × 1%.

For employees, if they choose to pay at the same base level in the same year, there will be no difference in the pension. However, if different base levels are paid, there will be a difference in the pension.

Assuming that an enterprise employee chooses to pay at the 60% level, while an institution employee chooses to pay at the 120% level. The average contribution index used in the calculation of the pension is generally 0.6 and 1.2, respectively.

According to the basic pension calculation formula, for the same year of contribution, the basic pension can be received at 0.8% of the social average wage of the year before retirement, while the institution employee can receive 1.1% of the social average wage. Assuming the social average wage is 10,000 yuan, the basic pensions received would be 80 yuan and 110 yuan, respectively.

② The personal account pension is equal to the balance of the social insurance personal account ÷ the number of months determined by the retirement age.The average social wage is 10,000 yuan, with a 60% contribution base of 6,000 yuan and a 120% contribution base of 12,000 yuan. For each month of contribution, the individual account can accumulate 480 yuan and 960 yuan, respectively. The accumulation over a year of contributions is 5,760 yuan and 11,520 yuan, respectively. This portion of the money is exactly the part that the employee contributes themselves.

Assuming retirement at the age of 60 (with a calculation period of 139 months), without considering interest, the monthly personal account pension can be received at 41.4 yuan and 82.8 yuan, respectively.

The gap in pension generated under different contribution levels is 121.4 yuan and 192.8 yuan, respectively.

Occupational pension benefits.

In addition, government and public institutions have established an occupational pension mechanism, with contribution and benefit levels being 1.5 times that of the individual account pension. In this case, the pension for employees of government and public institutions can exceed 300 yuan.

However, looking at the amount of contributions for both pension insurance and occupational pensions, the total amount contributed by employees of government and public institutions is three times that of the total contributions for enterprise pension insurance, but the pension benefits are only about 2.5 times. Moreover, the occupational pension is a limited pension benefit and is subject to personal income tax.

Overall, in terms of basic pension insurance for employees, it has indeed achieved the same contribution and the same treatment. However, if the contribution base is different, the calculation of the pension will also slightly favor the group with lower contribution levels in the basic pension part. If enterprise employees want higher pension benefits, they still need to participate in the enterprise annuity system or personally participate in individual pension plans. #Top Headline Creation Challenge# #Enterprise Pension#