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§ 26. Indexation of state pensions

(1)       By 1 April of each calendar year, state pensions calculated pursuant to this Act shall be indexed by an index the value of which depends to the extent of 20 % of the yearly increase of the consumer price index and to the extent of 80 % of the yearly increase in receipt of the pension insurance part of social tax. The indexing shall be carried out pursuant to the procedure provided by subsection (7) of this section.

(28.11.07 entered into force 01.01.2000 - RT I 2007, 62, 395)

(11)      Upon calculation of the index, the yearly increase of the consumer price index shall be multiplied by 0.2, the yearly increase in receipt of the pension insurance part of social tax shall be multiplied by 0.8 and the results shall be added together.

(28.11.07 entered into force 01.01.2000 - RT I 2007, 62, 395)

(2)       The yearly increase of the consumer price index shall be calculated by dividing the value of the consumer price index of the previous calendar year by the value of the consumer price index of the year before the previous calendar year, on the basis of the value of the consumer price index officially published by the Statistical Office.

(3)       The yearly increase in receipt of the pension insurance part of social tax shall be calculated by dividing the total amount of the pension insurance part of social tax of the previous calendar year by the total amount of the pension insurance part of social tax of the year before the previous calendar year, on the basis of information of the Ministry of Finance concerning the receipt of the pension insurance part of social tax.

(4)       The yearly increase of the consumer price index and in the receipt of social tax shall be expressed to the accuracy of three decimal places.

(5)       A state pension shall not be indexed if the value of the index is less than 1.000.

(51)      The Government of the Republic may approve a lower value of the index than the one provided for in subsection (1) of this section if:

1)         the estimated real growth of the gross domestic product of the same year is negative, or

2)         the difference between the expenditure prescribed for state pension insurance specified in subsection 57 (1) of this Act and the estimated income from social tax transferred into the state pension insurance funds exceeds 1% of the estimated gross domestic product of the same year.

(52)      The Government of the Republic shall add or clear the part of index which was not increased or reduced together with the approval of the new value of the index within five years as of the application of subsection (5) or (51) of this section.

(6)       The Government of the Republic shall approve the index with the value of at least 1.000 and the part of the index to be added or cleared on the basis of subsection (52) of this section not later than by 20 March of the given year.

(7)       By 1 April of a calendar year, the Social Insurance Board shall calculate the national pension rate, new values of the base amount of a pension and the value of a year of pensionable service by:

1)         multiplying the national pension rate by the index approved pursuant to subsection (6) of this section;

2)         multiplying the base amount of a pension by the index approved pursuant to subsection (6) of this section whose incremental part has been multiplied by the coefficient 1.1;

3)         multiplying the value of a year of pensionable service by the index approved pursuant to subsection (6) of this section whose incremental part has been multiplied by the coefficient 0.9.

(28.11.07 entered into force 01.01.2000 - RT I 2007, 62, 395)

(8)       At least once in every five years, the Government of the Republic shall prepare an analysis concerning the effect of the bases for calculation of state pensions provided by subsections (1) and (7) this section on the financial and social sustainability of the pension insurance system and where necessary, shall submit a proposal to the Riigikogu on alteration of the terms of application of the methods for calculation of the index of state pensions and application of the index.

(28.11.07 entered into force 01.01.2000 - RT I 2007, 62, 395)

 

Chapter 8

Pension Qualifying Period

 

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