Russian investment funds, illegitimately described as pensions funds will be forced to drop the name, when a pensions bill, strengthening the Russian pensions inspectorate and currently progressing through the Duma, becomes law.
Russia’s 200 non-state pension funds involving the savings of 1.5 million Russians will also b e given a much firmer legal basis.
The British Know-How Fund, a UK government body advising with the development of private pensions in Russia believes that the law’s passage is imminent”.
The bill is strongly expected to have the second of three Duma readings towards the end of March. Commentators suggest that the Duma will pass the law unanimously with the strong possibility that it will combine the second and third readings, further accelerating the process. The bill will then require the scrutiny of the upper house and Yeltsin’s assent before its enactment.
Voices urging the Duma to pass the law include the major Russia daily Sevodnya - an independent but pro-Yeltsin newspaper - which last month in a pro-private pensions article effectively called on the Duma to hurry up.
The political atmosphere has become considerably less hostile since the Communists who hold a majority in the lower house were converted to supporting the bill last year. Two previous attempts had failed but this bill was passed unanimously at its first reading in October.
Now that ideological differences have been resolved, the major difficulty lies in reconciling two versions of the law, one produced with the help of pensions professionals including the Know-How Fund which is progressing through the Duma and a variant, ostensibly a government version, but which is in reality authored by Dmitriev Vassily, an official who supervises the Stock Exchange and who is said to regard pensions as just another investment vehicle.
Despite this hitch, Greg McTaggart the Know-How Fund’s Moscow representative said: “There definitely will be a law. The unknown part is what will it contain and when will it be passed but it is looking imminent.”
Commenting on the law’s significance, David Callund of Callund Consulting in the UK and project manager for the Know-How Fund said: “The law will be vital for the future of non-state pension funds in Russia. At moment, the basis of legality for the constitutional operation of pension funds is quite thin, being dependent on a Presidential decree dating from September 1992.”
Callund added that the passage should help reverse a recent decrease in the amount of contributions being made to funds. However any Russia private pensions explosion will not happen until Russia’s double taxation on contributions (currently 28%) and on investment income is reformed.”