Individual coefficient of earnings

Individual earnings ratios are determined for each month from any consecutive sixty months  (at the option of the person applying for a pension) during the last ten years of work, regardless of the available breaks in the work, by dividing his earnings for calculating a pension by a minimum the amount of wages for the relevant month.

Individual coefficient of wage consists of four decimal places after comma.

When calculating the individual coefficient of wage, rounding up to four decimal places after comma is performed.

If the fifth character after a comma is greater than or equal to "5", then the fourth character is multiplied by one.

On an example of one month we will consider the dependence of the amount of earnings that will be taken to calculate the pension, on the amount of contributions paid for social insurance:

The man applied for an age related pension in April 2018 when he reached the age of 60 years. During the past 10 years, he was engaged in individual entrepreneurial activity, regularly paying insurance contributions to the Pension Fund. In March 2018, he paid insurance contributions in the amount of 172 240 sums.

Determination of the earnings of the entrepreneur, from which the pension will be calculated, can be conditionally divided into several stages.

Step 1. The income is determined.

The income of an individual entrepreneur for a specific month (year), taken into account when calculating the amount of a pension, is determined by dividing the amount of the paid monthly (annual) insurance contribution into the Pension Fund by the aggregate single social payment rate established by legislation (for microfirms and small enterprises, and also for farms) and total rate of  insurance contributions in effect at the time of payment of insurance contributions to the Pension Fund, and multiplying the result by 100 (paragraph 39 of the Regulation).

The aggregate rate of unified social payment (for microfirms and small enterprises, as well as farms) and insurance contributions in 2018 is 23% (15% of the USP for microfirms and small enterprises, and farms + 8% mandatory insurance contributions). Income (earnings) for March 2018 is 748 869.57 soums (172 240 x 100/23).

Step 2. The individual coefficient of wage is determined (ICW).

The ICW represents the ratio of earnings taken to calculate the pension for the relevant month, to the minimum wage for the same month. The ICW  will be 4.3478 (748 869.57 / 172 240).

Step 3. The average monthly minimum wage is determined (AMMW).

AMMW is determined by summing the established minimum wage for the corresponding 12 months and dividing it by 12. Taking into account the fact that the pension will be appointed from April 2018, the AMMW  amount to 157 263.33 soum [(149 775 (the amount of theAMMW April-November 2017) .) х 8 + 172 240 (the amount of the AMMW for December 2017 - March 2018) х4)] / 12.

Step 4. Determin the recalculated wage, which will be taken when calculating the pension (RW).

The CW is determined by multiplying the ICW by the AMMW. In our case, the CW for March 2018 is  683 749.51 soums (4.3478 x 157 263.33)

Frequently Asked Questions (FAQ)