Pension reform high on Russia's priorities
RUSSIA – Pension issues are second only to the 2002 budget on the Russian state legislative body, the Duma’s activity list, says the latest Tacis East/West Institute’s (TEWI) Russian pension reform review.
According to TEWI, pensions issues include both the basic pension reform package and a number of additional regulations, which affect the reform package, such as a draft proposal to pay full benefits to retirees that continue to work.
The proposal was vetoed by the President and rejected by the state pension fund, since it was considered in violation of the concept of the pensions reform.
Additionally, the President pointed out that it would require RB 5.4bn (€200m) if it were to be fully implemented, and that diverting funds at the point of transition could jeopardise the new funded system.
However, the draft was passed, as the Duma argued that the state pension fund had the money to cover it.
Other developments include a draft law on a new special merits element within personal pensions and the possibility of industry wide occupational pension schemes being created.
The special merit pension arrangement includes proposals set out by the government to provide supplementary benefits to the basic state pension for nearly 15,000 ‘distinguished individuals’, such as astronauts, artists and scientists. The draft involves between six and ten extra retirement benefits and it is estimated that an extra RB 220m (€8m) will be needed to finance the scheme. The draft was approved unanimously.
The prospects of industry wide pension arrangements in Russia came a step closer, as the state Pension Fund and ministry of railway prepared for the implementation of a pilot occupational pension scheme. However, the agreement ran into trouble when the minister of railways was charged with ‘financial violations’ by the general prosecutor’s office. It is now doubtful that the project will get under way.
In separate news, Baring Asset Management (BAM) says investors should give Russia more consideration as a viable market for investment opportunities, since it has not only been one of emerging Europe’s strongest economies this year, but one of the world’s.
Says Klaus Bockstaller, head of Eastern Europe, Middle East and Africa at BAM : “For the first six months of this year, Russia saw GDP growth of 5.4% and Russia has been instrumental in delivering strong performance in the last nine months in our Baring Emerging Europe Trust where it has the largest country weighting at 31%.”