Main points
- The amount of pension for individual entrepreneurs depends on certain taxes that the entrepreneur paid during his employment.
- The pension is calculated according to a formula that takes into account the individual earnings coefficient and the length of service coefficient.
Pension for self-employed persons / Photo by Pexels
Some entrepreneurs think that the individual entrepreneur group directly affects the future size of their pension, but they are mistaken. There are a number of other determining indicators, including those that the entrepreneur forms individually.
How is the pension calculated for self-employed persons?
The Oschadbank resource discusses the specifics of pension accrual for entrepreneurs.
Pension for self-employed persons is a payment that is calculated after the end of employment. The amount of the pension depends on the insurance period and the amount of the single social contribution (SSC) that the entrepreneur paid during the period of employment.
Please note! Payments directly depend on the level of income of the individual entrepreneur and the amount of social security contributions, which the entrepreneur chooses independently.
You can calculate the approximate level of your own pension using the formula:
P = Zp x IKZ x Ks
- P – the amount of the insured person's pension;
- Wage – average wage level in Ukraine over the last 3 years;
- IKZ – individual coefficient of wages (income) of the entrepreneur;
- Ks – seniority coefficient (1%, accrued for each year worked).
How and what indicators affect pension?
Each of the above elements has a separate meaning.
So, when it comes to paying the Social Security Contribution , we must understand: the larger the payment the entrepreneur makes, the greater the basis for pension payments he will have in the future.
The number of months during the activity of an individual entrepreneur for which social security contributions were paid is called the insurance period .
Individual salary coefficient – is determined by the ratio of the actual salary to the average income level in the country for one month. The indicator is a direct element of the pension calculation, it is in the formula.
The income of the insured person can also be compared with the minimum and average wage levels in Ukraine. Therefore, it is necessary to know these indicators.
Does the self-employed person group affect the amount of the pension?
Payments for all entrepreneurs are calculated using the same formula. The only difference may be in individual indicators.
Important! Pension for individual entrepreneurs of groups 3, 2 or 1 is determined according to one formula.
The only thing that can change the level of payments is the income of individual entrepreneurs of group 3. They have a higher level of allowable income, and accordingly, they pay more in taxes. So this will have a similar impact on pensions.
What pension should self-employed individuals expect before 2004?
Lawyer Olena Voronkova, in a comment to UNIAN, said that individual entrepreneurs who started working in the 90s or 2000s need to contact the Pension Fund with documents for confirmation.
They need to provide either a patent or a certificate of the right to engage in entrepreneurial activity, as well as documents confirming the payment of tax contributions,
– the lawyer explained.
She also noted that without documents confirming entrepreneurial activity, experience may not be counted for this category.
What kind of assistance can you get and what kind of individual entrepreneur should you open?
Individual entrepreneurs of groups 2 and 3 can receive a one-time payment of UAH 7,000 to 15,000. It is noted that this assistance is compensation for the business's investment in work despite the difficult energy conditions in the country.
And for those who just want to start their own business, there are a number of options. To do this, you don't need to have a large financial cushion for investments, the main thing is to choose the right field.