The retirement period is part of our life path, when professional activity usually gives way to well-deserved rest. At this stage of life, for many, the main source of funds becomes the retirement pension for social security income and contributory service.

Of course, there are different types of pensions, to which the right is acquired if the relevant legal prerequisites are met. They are divided into pensions related to work activity and those unrelated to work activity. The retirement pension for contributory service and old age falls into the first type, along with disability pensions and inheritance pensions. A retirement pension can be acquired on different grounds and under different conditions, according to the nature of the work performed, as this applies to teachers, workers in the first or second category of labor, military personnel, employees in special departments, etc. Pensions not related to work activity are: social old-age pension, social disability pension, military or civil disability pensions, as well as personal pensions. You can learn more about the types of pensions and the conditions related to their granting on the website of the National Social Security Institution.

 

1.       Retirement pensions for contributory service and age under the state social insurance

Throughout your entire professional career, part of your income in the form of insurance contributions goes to mandatory pension insurance. Thus, over the years, you accumulate rights under the State Social Security and amounts in your personal account in a Universal Pension Fund (UPF) or Occupational Pension Fund (PPF). The mandatory insurance contribution is distributed in a legally determined ratio across the two insurance lines. As a result, you are entitled to two pensions – one from the SSI and one from the UPF. A pension from the PPF is paid for early retirement for those working in categories I and II until they reach the general retirement age and cannot be received together with a retirement pension for work activity or a social disability pension under Part One of the Social Insurance Code. If you have transferred your funds from the UPF to the SSI, then you will receive a pension only from the SSI.

Regarding the retirement pension for contributory service and age for the most widespread third category of labor, the law provides for three varieties depending on the fulfilment of the retirement conditions - a pension for full contributory service, a pension for incomplete contributory service, and an early retirement pension granted in a reduced amount.

We must pay attention to the fact that there is a difference between work and contributory service. Work length is the time worked under an employment contract or service relationship. Contributory service is the time during which you worked and, accordingly, insurance contributions were paid on the income received. The contributory service for the period after December 31, 2002 of persons who worked part-time is determined in proportion to the length of working hours established by a regulatory act.

Other periods outside those in which you performed work activity are also considered as contributory service. Such are, for example, the period during which no work activity was exercised due to illegal denial of work, detention by the authorities, or dismissal recognized as illegal; the period of conscription or peacetime alternative service; the period during which an unemployed mother took care of a child up to the age of 3; the period during which unemployment benefits were received, etc.

•         Pension for contributory service and age under the general procedure

You are entitled to such a pension when you have worked predominantly under the conditions of the third category of work, subject to the simultaneous fulfilment of two conditions: reaching the legally determined age and having the full required contributory service. A gradual increase over the years of the retirement age is envisaged until reaching 65 years for both sexes, as well as the contributory service until reaching 37 years for women and 40 years for men. What the requirements are for these two parameters and how they increase can be found here.

•         Pension for incomplete contributory service

Due to various life circumstances, it is possible that you have not accumulated the full required insurance length. In such cases, you may be granted a pension if you have reached a higher age - 67 years, and if you have at least 15 years of actual contributory service. It takes into account only the actual calendar time worked under an employment or service relationship for which insurance contributions were due (for disability, old age and death), the period of conscription or peacetime alternative service, or the periods under Art. 7 of the Political and Civil Vindication Act for Individuals who Have Undergone Repressive Actions, as well as the time during which the due social security contributions were paid individually.

If your contributory service is insufficient to acquire the right to a pension under the general procedure, the legislation (Social Insurance Code – SIC) provides the opportunity to purchase contributory service, which is done by paying social security contributions for a certain number of months/years. The amount of the contribution is calculated as a percentage of the minimum monthly amount of the insurance income for self-insured persons for the respective year. You can take advantage of the following legal options:

- Purchase of up to 5 years of insufficient service to acquire the right to a pension under the general procedure

- Purchase of service for the period of study for completed higher or semi-higher education, as well as for a successfully defended doctoral thesis.

It is important to know that the insurance income for the period for which contributory service was purchased is not taken into account when calculating the individual coefficient of the pensioner.

Purchasing contributory service also brings additional benefits in the form of tax benefits - you can reduce the tax base before taxation by the amount of the contributions made.

 

2. Right to a pension before reaching the required age: a pension reduced with reduced amount

The legislator gives you the opportunity, at your request, to exercise your right to a pension early, but not earlier than 1 year before reaching the required basic retirement age under the conditions of the third category of work. In this case, it is mandatory that you have acquired the required contributory service according to the general conditions for retirement.

Carefully assess whether it is worth it, because in this case you will receive a reduced pension for life. The reduction is calculated as a percentage multiplied by the number of months by which you do not reach the age for the right to a pension under the general procedure.

 

Useful links:

National Social Security Institute

Social Security Code

Recognition of insurance periods (general provisions) – page on the NSSI website