The Ministry of Finance and the Bank of Russia propose to introduce for all citizens voluntary accumulative pension system, told a source close to the Central Bank, and confirmed two sources in the government. The same was reported by Reuters, citing its sources.
One of the variants of the device of such system that is being discussed in Finance Ministry and the Central Bank is to include all citizens by default, said a source close to the Central Bank, and confirmed by a source in the government. As planned by the agencies, contributions should be deducted from the salary. And at first, it is proposed to transfer the pension of 1% of salary for the second year the fee will increase to 2%, then 3% and so on until you reach 6%. List the contributions will be the employer, keeping a percentage of the employee’s salary. So, for example, happen fees personal income tax.
Citizens will be able to refuse to participate in this funded system, writing a statement. And as an incentive for participation in this system will be introduced tax incentives.
This is not a final proposal, underlines a source in the government. Now ongoing discussions on reform within the administration.
The distribution pension system is not balanced, so the authorities will always be tempted to send the cumulative contributions of citizens to the “common pot” and on payments to current pensioners, says a source close to the Central Bank. At such low oil prices “unfreezing” of the cumulative system will not, he adds. It is therefore necessary to create an alternative pension system.
The new system
In late February the head of the Central Bank Elvira Nabiullina said that the Bank of Russia is preparing proposals for reforming the pension system. According to her, Central Bank is considering the option where all citizens, including the so-called undecideds, will participate in the pension system.
“From a storage element not to be missed. Let it be transformed, but it needs to be saved,” — said Nabiullina (quoted by “Prime”), adding that the pension system should be built in such a way that workers were motivated to accumulate.
Proposals for reforming the pension system, the Bank of Russia is preparing together with the Ministry of Finance. “For a long time we developed them separately, and then proceeded to a joint discussion”, — said earlier the Deputy Minister of Finance Alexey Moiseev, adding that the reconciliation process between the Central Bank and the Agency “went pretty quickly, because the deals were similar, which also proves their optimality”. The proposal of the Bank of Russia to include all citizens in the accumulative pension system will have a beneficial effect on the development of the system, “however, you should consider its features from the point of view of the budget,” said Moses.
This is not the first attempt to work out the details of a voluntary cumulative pension system. A year and a half ago, a working group under the Ministry of Finance instructed the NAPF to prepare proposals for the development of the voluntary pension system. Private foundations are encouraged to transform the compulsory accumulative pension system voluntary. To oblige employers to deduct an additional 4% and employees 2%. This idea was not implemented.
Voluntary pension system is unlikely to be able to earn in Russia, says General Director NPF “LUKOIL-the guarantor” Sergey Erlik. “I don’t think people will voluntarily participate in it. Voluntary corporate pension system has been around for years, but never managed to become popular. The number of clients is growing mainly thanks to the efforts of big corporations, their own people in the system don’t go,” says Erlich. If the citizens really will be included in the system by default, the first time the number of its customers will be large, he adds. “Gradually, however, citizens will know that their wages go additional contributions, and will emerge from the system,” says Erlich.
From 2016 all Russian citizens are by default participants in the distributive pension system (contributions of employed people in full go on pensioners). Until the end of 2015, the citizens had the opportunity to write a statement and become a participant of the funded pension system, in which 6% of contributions goes to the personal savings. Thus since the beginning of 2014, the contributions of citizens did not accumulate, as the government declared a moratorium on formation of accumulative part of pension.