Putin pushes Russian pension reforms
Discussions about accelerated pensions reform are under way in the Russian Federation, with a target date for finalised proposals of the end of last month. This could be quickly followed by draft legislation as President Putin is understood to be very keen to have new laws in place.
“Very high importance is being given to pensions issues currently,” says Matthias Zeeb, pensions economist at Callund Consulting in the UK, who points out that ministers and highly-placed civil servants are now involved in determining the future of the state pension system. “Previously it was mainly pensions specialists and academics. Now those concerned are really involved in the decision making process.”
A broad-based National Council of Pension Reform has been established by President Putin with some 34 members, including ministers, practitioners, politicians and trade unionists, to consider the future of the state pension structure. The size of the council may not make for speedy deliberations, Zeeb points out.
While there is agreement that some degree of mandatory funding should be introduced, beyond that there are differences in views, he says. “Some would like to see the funds managed by private asset management companies and administered by private pension funds. Others would like to see it administered by the state, while the assets may be managed privately after being put out for tender.”
Depending on the extent of the funded proportion, the first pillar system could end up being quite slim, he adds. But the degree will depend on concerns about corporate governance and macro-economic risks. “It probably would not be popular in Russia at present to allow considerable investment abroad.”
There have been changes in the pensions contributions and pensions payments calculations since the beginning of 2001. Contributions are collected by the tax authorities through the unified social tax. “While the state pension fund has lost the responsibility for this, it has taken over from the social services offices the responsibility for calculating pensions amounts, as well as the actual payment.”