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New Pension System will be Introduced
October 10, 2015 11:33


The Bank of Russia is developing a new system of pensions for citizens, an alternative to funded pension, with the help of the World Bank. This is reported by TASS with the reference to the First Deputy Chairman of the Central Bank Sergei Shvetsov. As Shvetsov explained, the details of the new system will be disclosed “in the coming month”.

According to him, the new system will allow citizens to have a “normal replacement rate”. “We are trying to formulate some alternative that would be less expensive for the budget, but not less effective in terms of the volume of attracted funds of population for further increase in the replacement rate” - he said. The Deputy Chairman of the Central Bank also said that the new scheme would most likely be not completely voluntary. According to him, citizens and businesses need to be “encouraged to save money” in non-profit pension funds. In accordance with current legislation, the employer transfers 22 percent of payroll of one employee to the pension system: 16 percent - to the insurance part (including payments on current retirees), 6 percent - to the accumulation part. These 6 percent are the employees’ contribution to their future pensions.

On September 17 the Ministry of Finance of the Russian Federation made specific proposals on reformation of the pension system. The agency proposes to increase the age for well-deserved rest up to 65 years for men and women. According to the calculations of the Ministry of Finance, it will save up to 1.3 trillion roubles in three years. Besides, the Ministry is in favor of reduced indexation of pensions (4 percent) and the abolition of payments to pensioners with an income starting from 500 thousand roubles.

The ideas of the Ministry of Finance were approved by the Ministry of Economic Development. On October 7 the Russian Prime Minister Dmitry Medvedev speaking at a meeting with the leadership of “United Russia” said that the retirement age in Russia would not grow because there were no preconditions for this. At the same time the Prime Minister objected against the non-payment of pensions to working pensioners with an income above a certain amount, but he considers it appropriate to think about the differentiation of payments, as well as the refusal from indexation of pensions of such retirees.


Author: Anna Dorozhkina

Tags: society Russian laws    

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