1-st Tier – Mandatory State Non-funded Pension Scheme
The 1st tier of the pension system was launched in January 1996. It includes the principle of generation and gender solidarity. Solidarity of generations means that the social insurance contributions made by working population are used to pay the old age pensions to the generations of pensioners. Gender solidarity means that for men and women after retirement the same pension payment period is foreseen.
For each person who is making social insurance contributions, including those persons for whom the contributions are made by the state (ex. persons taking care of a child under 1.5 years, soldiers of the mandatory military service, disabled people who are not working etc.) there is a personal account opened where information about the contributions made is stored (the money is not saved there!).
All socially insured persons whose social insurance contributions are registered in their personal account are involved in the 1st pension tier.
From the amount from which the contributions are calculated 23,86% are channelled for pension insurance, but 20% of it creates the person’s pension capital.
The 1st tier of the pension system ensures pensions for all persons, who had been socially insured for at least 10 years. If the person’s insurance period is less than 10 years the state social insurance benefit is granted to him.