Recently, many have proclaimed
Lawyer, human resource manager
Blogger for financial professionals and insurance practitioners
Explain on social platforms
How to pay taxes on pensions and other related issues
thereinto
"The pension tax threshold is 5,000 yuan per month"
"To receive a pension, you have to pay 3% tax" and other sayings
aroused the attention of netizens
Are these interpretations accurate?
Relevant departments
Respond to the rumors on the Internet one by one
Q1
Do retirees have to pay tax on their basic pension?
At present, the basic pension actually received by an individual is exempt from individual income tax.
According to the relevant provisions of the Individual Income Tax Law of the People's Republic of China and its implementing regulations, the settling-in allowance, retirement allowance, basic pension or retirement allowance, retirement allowance and retirement living allowance paid to cadres and employees in accordance with the unified provisions of the state are exempt from individual income tax.
Q2
It is rumored on the Internet that "the pension tax threshold is 5,000 yuan per month", and once this figure is exceeded, you need to pay taxes. Is that accurate?
Inaccurate, as mentioned above, the basic pension actually received by an individual is exempt from individual income tax, let alone the tax threshold.
The new IIT Law, which came into effect in 2018, stipulates that the comprehensive income of a resident individual shall be the taxable income after deducting expenses of 60,000 yuan from the income of each tax year, as well as special deductions, special additional deductions and other deductions determined in accordance with the law. Converted to what we usually call the individual income tax threshold, that is, 5,000 yuan per month.
Retirees do not have to pay individual income tax regardless of whether the basic pension exceeds 5,000 yuan/month.
Q3
Is the rumor that "you have to pay 3% individual income tax to receive a pension" true?
The 3% tax is aimed at personal pensions, not basic pensions.
On November 25, 2022, the personal pension system in mainland China was officially implemented. In the payment link, the payment of individuals to the personal pension fund account shall be deducted from the comprehensive income or business income according to the limit standard of 12,000 yuan/year. In the investment link, the investment income included in the personal pension fund account is not subject to individual income tax for the time being. In the receiving link, the personal pension received by the individual is not included in the comprehensive income, and the individual income tax is calculated and paid separately at the tax rate of 3%, and the tax paid is included in the "income from wages and salaries".
When an individual receives a personal pension in accordance with the regulations, the commercial banking institution of the city where the personal pension fund account is opened shall withhold and pay the individual income tax payable.
Know more
How is the pension calculated?
What is the payment period?
Delaying retirement affects
How many years of pension contributions?
Jin Weigang, vice president of the Chinese Social Security Association and vice president of the National System Research Institute of Zhejiang University, said that after the retirement age is extended, there may be two impacts on pensions.
The extension of the payment period, according to the current calculation and payment method, for every 1 year of payment extension, the pension benefits can be increased by 1%, or lead to a significant increase in benefits;
The increase in the funds of the personal pension account will increase the level of treatment of the personal pension in the future.
In addition, there is also a significant feature of this delayed retirement plan, when everyone chooses to retire early within the allowable range, the personal pension will not be discounted.
Conditions for receiving a pension
There are three conditions for employees to receive a monthly pension:
(1) Have reached the statutory retirement age and have gone through the retirement procedures;
(2) The units and individuals to which they belong participate in the endowment insurance in accordance with the law and have fulfilled the obligation to pay the endowment insurance;
(3) The number of years of individual payment reaches the statutory minimum payment period.
About pension insurance
You need to know this
The payment period refers to the cumulative number of years of payment, which can be interrupted in the middle and does not need to be continuous.
Even if the pension insurance has been paid for a sufficient number of years, as long as there is an employment relationship, social security must be paid.
Pension insurance for flexibly employed persons can voluntarily choose whether to continue to pay after the completion of the payment period.
If the cumulative contribution of the employee pension insurance is less than the number of years when the employee pension insurance reaches the statutory retirement age, the payment can be extended to the full term, and the payment cannot be paid in a lump sum.
Regardless of whether it is a flexible employee or an insured employee of a unit, the calculation and payment method of pension benefits at retirement is the same. The level of pension benefits is mainly related to these factors: payment base, payment period (including deemed payment period), cumulative savings amount of personal account, pension treatment calculation base at retirement, etc.
In the event of the death of a participant, the balance in his or her personal account can be inherited. Regardless of whether an employee dies during employment or dies after retirement, the principal and interest earned in his or her personal account can be inherited.
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Edit | Yao Taosheng
Proofreading | Yang Sha, Feng Yuhui, Gao Zhiming, Huang Ruitong
Proofreading | Dong Fangjun, Zeng Chuyuan
Executive Producer | Yu Zhiguo
Source of information | Guangdong Provincial Federation of Trade Unions, Shanghai Internet Rumors, Shangguan News, Ministry of Human Resources and Social Security, Labor Daily