Today, a netizen from Hebei Province left a message saying that from January 1993 to May 1995, his unit did not pay for his pension insurance. Now, according to the policy, he can make up for it at his own expense (it is estimated that the unit no longer exists or lacks the ability to bear the cost), and it will cost a total of 14,000 yuan. Is it cost-effective to make up for this 14,000 yuan 10 years before retirement?

We can calculate this based on the pension calculation formula in Hebei Province.

The pension calculation formula for retirees in Hebei Province mainly includes three parts.

① Basic pension, which is equal to the pension payment base of the year of retirement × (1 + the average contribution index of the individual) ÷ 2 × contribution years × 1%.

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The pension payment base in Hebei Province in 2023 is 7,122 yuan, and it is expected that the future growth rate will not be too fast. For simplicity in calculation, let's assume that it will increase to exactly 10,000 yuan in 10 years (which is also a transition to the full range of social average wages).

The contribution years have increased by two years and four months, which is 2.33 years.

Generally, when making up for pension insurance, it is done at the lowest level of 60%. Therefore, the contribution index should be 0.6. However, the calculation of the contribution index generally uses the contribution years after 1996. For simplicity, let's assume that the average contribution index at retirement is also 0.6. Generally, the actual average contribution index will be higher because in the early years of working in the unit, the unit's contribution level based on the salary was relatively high, so the average contribution index will be higher.

With an average contribution index of 0.6 and a contribution period of 2.33 years, according to the pension calculation formula, one can receive a pension equal to 1.864% of the pension payment base. With a base of 10,000 yuan, one can receive a basic pension of 186.4 yuan per month.② Personal account pension is calculated by dividing the balance of the individual's social insurance account by the number of months determined by the retirement age.

If contributions are made regularly, they are credited to the personal account at 8% of the contribution base. However, before 1996, personal accounts were generally not established. Therefore, the impact on the personal account pension part is zero. But due to the lack of the personal account pension part, there is a transitional pension as compensation.

③ Transitional pension = Pension payment base of Hebei Province in the year of retirement × Average contribution index × Contribution years before the establishment of the personal account × 1.3%.

With an average contribution index of 0.6, the additional contribution years before account establishment of 2.33 years can result in an increase of 1.8174% in the pension payment base. With a payment base of 10,000 yuan, this means an additional monthly pension of 181.74 yuan.

By summing up the increase in pension, it can be concluded that by paying into the social insurance for these two years, and retiring 10 years later, it is expected that one can receive an additional pension of 368 yuan per month, which amounts to over 4,400 yuan per year. If it only costs 14,000 yuan, it would take roughly three and a half years to break even.

The most advantageous aspect of participating in social insurance is that its pension benefits are linked to the average social wage. Especially in the early years when our average social wage was relatively low, it was really cost-effective to participate and make contributions. Now, even though there are late fees and other payments to be made for back payments, it is still very cost-effective.

After retirement, the pension will also be adjusted annually based on the average social wage and price increases. With an additional two years and four months of pension, there will also be an increase of three to five yuan per year. For example, according to this year's pension adjustment plan in Hebei Province, it is likely to increase by about five yuan.

In the event of the death of the insured person, family members can also receive benefits such as funeral expenses and consolation money. Therefore, it is very necessary to participate in social insurance, and one should contribute as much as possible. #Top Headline Creation Challenge# #Pension Knowledge#