RUSSIA - The International Monetary Fund has stated expects private pension funds “to grow rapidly” in Russia as pension benefits increasingly become part of salary packages.

“A distrust of financial instruments” and a lack of tax incentives “have limited the growth of private pension funds” at present, the IMF argued in its latest Financial Sector Stability Assessment Update on Russia.

In total, Russia’s 265 private pension funds with a total of five million contributors and one million pensioners currently make up just 2% of financial assets in Russia, which amounts to roughly 2% of GDP.

“The market is dominated by the top 10 occupational funds, which hold approximately 80% of total non-state pension funds (NPF) assets,” the IMF pointed out.

However, “this sector is expected to grow as employers include pension schemes in compensation packages,” the body argued.

Pension funds’ development could get a further boost by the realisation of long-standing plans to harmonise Russian accounting standards with IFRS, which would affect pension accounting as well.

According to the IMF, “a proposal has been submitted on consolidation of accounts, and on mandatory use of IFRS by banks.”

The international organisation continued: “This would also apply to listed companies, insurers, pension funds and other public companies, benefiting disclosure and transparency and improve the effectiveness of supervision and regulation.”