2% of salary to pension
The national Association of pension funds (NAPF) proposes to introduce in Russia a mandatory corporate pension programme. The representatives of the NPF have developed an alternative concept of the current pension system and sent it to the Bank of Russia, the Ministry of Finance, Ministry of economic development, the Ministry of labor, as well as in the state Duma and the Pension Fund (with mail).
The authors of the concept believe that, first, it is necessary to maintain mandatory retirement savings, and, secondly, to establish a system of mandatory corporate pension. Employers will need to establish a corporate pension plan and make contributions from the funds of remuneration of employees. “Employers are included in the system in stages, depending on the size of the state”, — stated in the concept of the pension system prepared by the NAPF.
“The most important thing in the proposed scheme, that the pension of citizens will be formed due to several sources that will reduce initial costs and increase the size of future pension, using some of the pension products,” says one of the developers of the concept, Deputy Executive Director of NPF “Welfare” Ivan Volkov. According to him, the expenses of each of the parties on contributions to corporate pension system would not be significant as there will be tax breaks and incentives. The size of the tariff will be discussed, says Volkov. “How much have to pay on their corporate pensions individual citizen may depend on the cumulative period, age, income and how long and how much pension he would receive in the future. Corporate programs allow to do,” he explains.
The CEO of NPF Sberbank Galina Morozova, who also participated in the development of pension concepts, believes that the payment of the corporate pension will not exceed 2% of the salary. “It’s not much, but for those people who are just starting to work, in 20-30 years, will be a big increase in their pension,” she says.
Benefits for retired
According to the authors of the concept, to manage corporate pensions are private pension funds. Mandatory corporate contributions should be protected by the Deposit guarantee system of pension savings, i.e. the state must guarantee the preservation of the value of contributions. The NAPF believe that the first to establish a corporate pension program needs large company, which employs more than 1,000 people. When hiring an employee automatically will be included in a company pension plan, a portion of his salary be sent to the formation of future pension. The hope is to provide an opportunity for the employee to refuse to participate in the corporate pension programme.
Encourage employers to create corporate programs, and employees to pay contributions for their future retirement, according to the NAPF, by using tax incentives. “Employee-generating part of the salary on corporate pensions will be able to claim various benefits from the state. For example, on the social deduction from personal income tax. The employer can take into account the funds earmarked for corporate pension plans, in their costs, which is also economically profitable”, — cites the example of Ivan Volkov. This practice of tax privileges is now working on corporate programs that companies create within the framework of voluntary pension provision. In addition, he believes that the government, if deems necessary, may encourage citizens to save for retirement with the help of co-financing.
The authors of the concept believe that if we continue with the existing system of mandatory personal savings (6% of wages) and Supplement its mandatory corporate programs, we can give future pensioners an income of at least 70% of their previous salary. Now, NAPF, this figure is about 36% and it decreases. According to the head NAPF Konstantin Ugryumov, the introduction of mandatory corporate pensions “will increase the responsibility of the Russians in the shaping of their future pension”.
The government and the Bank of Russia also are working to improve the pension 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.
As previously reported , the Ministry of Finance and the Bank of Russia propose to introduce for all citizens voluntary accumulative pension system. 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, the contributions must 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.
In addition, in March 2016, Deputy Finance Minister Alexei Moiseyev told that the Finance Ministry proposes to provide tax relief to the citizens for opening of pension accounts in banks. According to him, this must be carried out a number of requirements — similar to those that existed under the voluntary pension insurance. He explained that only in this case will be given tax breaks “similar to those that exist now, when money is credited to the voluntary pension provision”.