The Ministry of Finance and the Bank of Russia want to return pension savings to Russians. News of the day in the world and Russia today

The Ministry of Finance of Russia proposed to carry out the “privatization” of the pension savings of Russians, transferring them to the ownership of citizens.

They write about it Vedomosti with reference to the presentation of the department and the Central Bank (CB).

According to the newspaper, the measure was discussed at a strategic session on the development of the financial market in the government on August 30. It was formulated in the presentation as “carrying out the “privatization” of citizens’ pension savings” and was presented at the meeting by the Minister of Finance Anton Siluanov and the Chairman of the Central Bank Elvira Nabiullina. The initiative is included in the block dedicated to the development of the pension and insurance market.

We are talking about giving citizens who have pension savings the right to invest them of their choice, albeit subject to certain criteria, the source of the publication who participated in the meeting.

These pension savings were formed due to the fact that until 2014, six percentage points out of the 22 percent insurance rate constituted the funded part of the pension, which could be disposed of more freely than the insurance part. For example, it could be transferred to a non-state pension fund (NPF) to increase profitability.

However, since 2014, a moratorium on the formation of such savings began to operate in Russia, at the end of last year it was extended until 2024.

Anatoly Aksakov, head of the State Duma Committee on the Financial Market, confirmed to the publication that the “privatization” of pension savings means the transfer to the ownership of citizens of the savings formed under the mandatory pension insurance (OPS), but frozen since 2014.

Now these savings are actually owned by the state, although this is more of a technical nuance, but it is supposed to be overcome.

Aksakov recalled that now Russians who have such savings can only transfer them from one NPF to another.

Now it is assumed that citizens will be able to choose whether to leave their money under the management of the fund – PFR or NPF – or invest on their own, but according to clearly regulated criteria.

The MP added that the “privatization” model is still being formed, so it is premature to discuss its details. But we are talking about investments, and the withdrawal of funds, “like from a deposit”, is not expected, Aksakov specified.

Another session participant confirmed that specific details were not discussed at the meeting – they are being worked out now.

In addition to “privatization”, among the proposals of the Ministry of Finance for the development of the pension and insurance market are: the development of corporate pension programs, the stimulation of non-state pension funds for long-term investments, the modernization of instruments for long-term investments of individuals, the introduction of a system for guaranteeing long-term savings, as well as tax incentives.

Similar proposals were already made by the Central Bank in its report “Financial Market: New Challenges in Modern Conditions”. In it, in particular, the regulator stated the need to support corporate systems of voluntary pension savings, since they can become the basis of a new savings system.

According to Aksakov, under the “support” the Ministry of Finance and the Central Bank meant tax incentives, while not naming its specific parameters at the meeting.

The MP recalled the previously discussed idea to establish tax incentives for citizens’ incomes, which are sent to the NPF.

For example, if a citizen sends up to 6 percent of income to the NPF, then his personal income tax base will decrease by 36 percent. Accordingly, the Russians have an incentive to send funds to the funded system, and then invest them in various assets, Aksakov concluded.

In addition, in a report on the prospects for the financial market, the Central Bank said that it would consider the abolition of part of the requirements for the structure of NPF investment portfolios. At the same time, the risks of funds will be limited by the requirements for their stress testing.

Aksakov told the publication that at a meeting in the government it was mentioned that the list of available long-term instruments could be expanded for individuals. At the same time, the parliamentarian also clarified that no specific examples were mentioned at the session.

It is assumed that the implementation of this policy should make it possible to increase the additional pension income of citizens from 8 percent in 2022 to 9.1 percent in 2025 and 10.8 percent in 2030.

Earlier it was reported that the Ministry of Finance and the Central Bank have developed a reform bill to change funded pensions. It implies tax deductions of 6 percent, co-financing from the state and insurance of savings up to 1.4 million rubles, by analogy with bank deposits. The consideration and possible adoption of the document was reported back in January 2022 “News”.

In May, Anatoly Aksakov, head of the lower chamber committee on the financial market, said that the document could be submitted to the State Duma before the end of the spring session.

At the same time, the sources of the newspaper in the Central Bank, the State Duma and the Ministry of Finance expressed doubt that the bill would be adopted in 2022.

An informant close to the Ministry of Finance added that the decision on the initiative has not been made and, most likely, will not be made until the end of the year.

At the end of December 2021, Russian President Vladimir Putin signed a law to freeze the funded part of Russian pensions until 2024.

It is assumed that the extension of the freeze period will reduce the transfer from the country’s budget to the budget of the Pension Fund by 772.9 billion rubles.

The funded pension has been frozen since 2014. This means that deductions to the funded part of payments in the amount of 6 percent of wages are directed to the insurance part for payments to current pensioners. The authorities expected that the freeze would be a one-time one, but since then it has been extended.

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