With a pension that moves below the poverty line (or even below it), there is a risk of finding self-employed people who will insist on paying the minimum allowable insurance premium throughout their working life. Especially if the insurance period is limited, the monthly pension may be less than 600-700 euros per month. … The nuisance for a freelancer, especially one who is near retirement, is that even if he chooses a higher class of insurance, the improvement in final retirement income will not be too great to justify paying additional insurance premiums. Cause; “Imbalance” between the national pension (which everyone receives after working 15 years of insurance) and “compensation”, which is built from month to month through the payment of insurance premiums.

The discussion about the level of pensions for the self-employed is renewed in connection with the upcoming increase in insurance premiums to adjust for inflation. The law provides that insurance premiums must increase based on average annual inflation. But as that figure looks set to rise above 9% – this will be noticeable on Monday after the announcement of the agreed index for October – more than 1.3 million self-employed people are reacting because they will have to face increased social security. contributions. The counterargument, apart from the obvious argument that the fund’s insurance premiums are that the self-employed, by insisting on paying low premiums, risk “impoverishment” during the pension process.

How is the self-employed pension calculated? The insurance premiums he pays every year (only for the pension part, not for health care) are reduced to annual earnings. They are entered annually into the insured’s “basket” (which is mostly filled with premiums paid since 2002), adjusted based on each year’s inflation, and a pensionable income is generated. On their basis and depending on the period of insurance, a proportional part of the pension (or compensation allowance) is calculated, which is added to the national pension, which is also adjusted annually for inflation.

So what happens to a self-employed person’s pension when they insist on paying the lowest premiums? Pension earnings are kept at a very low level, and year after year they “increase” the pension, which is getting closer and closer to the minimum national pension. The following example is illustrative: an insured self-employed person who chooses to pay the minimum amount each year, as it were, fixes (in today’s conditions) an annual salary of 9,300 euros. How does this happen? Of the 210 euros in insurance premiums, which is also the lowest level, 155 euros go towards retirement. They are multiplied by five and receive a monthly salary, which in this case is 775 euros per month or 9300 euros per year. With this annual earnings – and assuming that in the coming years inflation will again have big ups and downs, as it has done from 2002 to the present day – an insured person who insists on paying the minimum to the end will receive the following pension:

1. 480 euros gross with insurance for 15 years.

2. 566 euros with insurance for 20 years.

3. 613 euros with insurance for 25 years.

“Key” insurance premiums and years of insurance – How much does the choice of a higher class of insurance affect earnings.

4. 669 euros with insurance for 30 years and

5. 900 euros with insurance for 40 years.

Therefore, it is obvious that even for a person with forty years of experience, the net monthly income in retirement does not even come close to 1000 euros, while with several years of insurance the insured person actually receives a national pension (from 1/1/2023 it will be 369 euros in 15 years and 411 euros in 20 years) and… something.

The observed problem is that even if someone opts for higher levels of insurance, their pension does not increase to the extent that justifies paying additional insurance premiums. For example, when moving to the 3rd class of insurance, they will pay 302 euros with today’s data (actually 330 euros from the beginning of 2023), that is, 90 euros more per month. How is the pension structured under the 3rd insurance class?

1. 542 euros for 15 years of insurance.

2. At 647 euros for 20 years of insurance.

3. For 719 euros for 25 years of insurance and so on.

Well, you need to pay at least 90 euros more insurance premiums to increase your pension by about 60-80 euros, which means that the survival time after retirement must be even longer than the insurance period to justify the insurance premiums . paid. Solving this problem requires not only adjusting contributions to inflation, but also strengthening the compensatory part of the pension.