This is due to the pension law, which stipulates that anyone who decides to submit an application in the first half of the year has their monthly payment calculated with annual indexation; those who wait until July will also benefit from quarterly indexation. Sometimes this means an increase in the pension of several hundred złoty.
A new pensioner who ends their professional activity in the second half of the year has their pension contribution account indexed annually and quarterly. As a result, they benefit twice. By contrast, a person leaving work in June receives only annual indexation.
“That is why choosing the right time to submit a pension application is so important. June is a particularly unfavorable month for the amount of the future benefit. This follows directly from the rules for indexing pension contributions—the money we have accumulated for old age at ZUS,” explains Iwona Kowalska, ZUS regional press spokesperson in Lower Silesia.
Where does this problem come from?
Every month, everyone sets aside 19.52 percent of their salary for retirement. ZUS records this money in the individual pension accounts of each insured person. To prevent the contributions accumulated there from losing value, they are regularly indexed. Therefore, the higher the indexation, the higher the pension. And it is precisely the indexation that creates the problem, sometimes causing significant differences in the calculation of the monthly payment.
“Unfortunately, some people are unaware of this and receive lower payments because they submit their applications in June. It is therefore better to wait until July so that the contributions are additionally covered by quarterly indexation,” encourages Iwona Kowalska.
Submitting the application earlier may mean a loss for the pensioner of between several and even a dozen or so percent of the benefit. It is therefore worth waiting until July, when the pension calculation will be more favorable.
There are also situations in which even a few days’ delay can increase the amount of the benefit. For example, it may be advantageous for someone born on January 15 to submit a pension application on the 15th day of the month, such as July 15. Why does this happen? It is all caused by the way the pension amount is calculated. Let us recall that the benefit amount results from dividing the accumulated pension capital by the average further life expectancy published by the Central Statistical Office. If we therefore wait until the day corresponding to our date of birth, the capital will be increased by one month of contributions. At the same time, the denominator—that is, further life expectancy—will be reduced by one month. Increasing the numerator and reducing the denominator will result in a higher pension. In this case, the difference in the benefit received will of course be small, probably amounting to a few złoty. However, given that a pension is received for the rest of one’s life, it may be worth postponing the decision.
“Before submitting a pension application, it is always worth speaking to a pension adviser at ZUS. Their help may prove invaluable, as at our request they will calculate a forecast of the future benefit under various scenarios for ending professional activity. Thanks to this simulation, we can assess whether it is worth retiring now or whether it might be better to wait, for example, a few months, and accumulate more contributions,” advises the spokesperson.
The general rule is that the longer we work, the more it pays off. If we postpone retirement and wait to submit the application, the benefit will be higher. One additional year of work increases it by an average of as much as 8 percent. There are also situations in which a future pensioner learns from an adviser that they are, for example, a few weeks short of completing the employment record needed to qualify for a guaranteed minimum pension. In such a situation, it is worth continuing employment until the time indicated by the adviser.
When deciding to withdraw from professional life, let us remember that a pension is our right, not an obligation. We can retire now, but it could just as well be next month or next year. The decision is entirely ours and should be carefully considered.