Funded Pension Scheme

Накопительная пенсия

Coverage

Voluntary participation

Citizens of the Russian Federation as well as foreign citizens and stateless persons residing permanently in the Russian Federation enrolled in the mandatory pension insurance.

Opting in (suspended: 2014 – 2023)

Persons born after 1967 who are enrolled in the mandatory pension insurance can decide to opt into the funded pension scheme and pay parts of their mandatory insurance contributions into this individual accounts scheme. This option has been suspended until 2023.

Financing

General finances

Fully funded personal pension plans based on contribution payments (incl. state allowances) and capital revenues.

Contribution rates

Insured persons provide contribution payments voluntarily and decide upon the amounts individually; contribution payments can also be paid by employer; means of maternity (family) capital (for the formation of the funded pension of the mother) can be contributed entirely or partly to the scheme.
In case of opting in: fixed share of monthly gross earnings (6%) as part of the mandatory insurance contributions (total 22%) covered by the employer (option suspended from 2014 until 2023).

State support & incentivising strategies¹

Payers of additional contributions are entitled to a social tax deduction on income tax on natural persons.

Administration

The Pension Fund of the Russian Federation through management companies.
Private pension funds operating in the field of mandatory pension insurance.
The Ministry of Finance of the Russian Federation controls and oversees the formation and investment of pension savings.

Qualifying Conditions

Persons must have reached the age of 55 (women) or 60 (men).
Persons must fulfil the qualifying conditions for the standard or early retirement pension of the old age insurance pension scheme.
The person must have accumulated capital means.
Options for the deferring of pension payment: for every deferred year, the expected payment period decreases by 12 months (payment period cannot be less than 168 months).

Benefits

Pension payments

Accumulated capital through contribution payments (incl. state subsidies and additional contributions), means of maternity/family capital and investment yields.
Life-long annuity paid monthly if pension savings are more than 5% of the total amount of the old age insurance pension; if monthly payments are below threshold: option for one-time lump sum payment of pension savings.
Fixed-term benefits (срочная пенсионная выплата) are paid only if additional contributions, state subsidies and means of maternity/family capital were paid to the scheme.
The payment period should not be shorter than 10 years.

Factors for payment calculation

Monthly benefit payment: based on the amount of pension savings and the expected payment period (in 2021 this period is 264 months).
Calculation of fixed term benefits: based on the amount of pension savings, formed through additional contributions, other means, investment yields; the expected payment period should be not less than 10 years.
Adjustments: pension payments shall be adjusted every year in accordance with the amount of newly paid contributions or other means in the individual account.

Taxation and social security contributions

Pension payments are not subject to income tax or social security contributions.

Coverage

Financing

Administration

Qualifying Conditions

Benefits

Voluntary participation

Citizens of the Russian Federation as well as foreign citizens and stateless persons residing permanently in the Russian Federation enrolled in the mandatory pension insurance.

Opting in (suspended: 2014 – 2023)

Persons born after 1967 who are enrolled in the mandatory pension insurance can decide to opt into the funded pension scheme and pay parts of their mandatory insurance contributions into this individual accounts scheme. This option has been suspended until 2023.

General finances

Fully funded personal pension plans based on contribution payments (incl. state allowances) and capital revenues.

Contribution rates

Insured persons provide contribution payments voluntarily and decide upon the amounts individually; contribution payments can also be paid by employer; means of maternity (family) capital (for the formation of the funded pension of the mother) can be contributed entirely or partly to the scheme.
In case of opting in: fixed share of monthly gross earnings (6%) as part of the mandatory insurance contributions (total 22%) covered by the employer (option suspended from 2014 until 2023).

State support & incentivising strategies¹

Payers of additional contributions are entitled to a social tax deduction on income tax on natural persons.

The Pension Fund of the Russian Federation through management companies.
Private pension funds operating in the field of mandatory pension insurance.
The Ministry of Finance of the Russian Federation controls and oversees the formation and investment of pension savings.

Persons must have reached the age of 55 (women) or 60 (men).
Persons must fulfil the qualifying conditions for the standard or early retirement pension of the old age insurance pension scheme.
The person must have accumulated capital means.
Options for the deferring of pension payment: for every deferred year, the expected payment period decreases by 12 months (payment period cannot be less than 168 months).

Pension payments

Accumulated capital through contribution payments (incl. state subsidies and additional contributions), means of maternity/family capital and investment yields.
Life-long annuity paid monthly if pension savings are more than 5% of the total amount of the old age insurance pension; if monthly payments are below threshold: option for one-time lump sum payment of pension savings.
Fixed-term benefits (срочная пенсионная выплата) are paid only if additional contributions, state subsidies and means of maternity/family capital were paid to the scheme.
The payment period should not be shorter than 10 years.

Factors for payment calculation

Monthly benefit payment: based on the amount of pension savings and the expected payment period (in 2021 this period is 264 months).
Calculation of fixed term benefits: based on the amount of pension savings, formed through additional contributions, other means, investment yields; the expected payment period should be not less than 10 years.
Adjustments: pension payments shall be adjusted every year in accordance with the amount of newly paid contributions or other means in the individual account.

Taxation and social security contributions

Pension payments are not subject to income tax or social security contributions.

¹State support for additional voluntary contributions to the funded pension (from 01/10/2008 to 31/12/2014): State subsidies provided to persons who paid additional voluntary contributions between 01/10/2008 and 31/12/2014 and started paying such contributions in the time until 31/01/2015 (requirement: minimum contribution amount is RUB 2,000). State subsidies of a maximum of RUB 12,000 per year (unless a person already receives a pension) is provided for 10 years since commencement of participation in the scheme. Employers have to pay insurance contributions and income tax on the additional contributions, which are co-financed by the state if the contributions are higher than RUB 12,000 per year and per employee.

Legal Basis: Federal Law No. 423-FZ of 28/12/2013 (as amended by Federal Law No. 429-FZ of 08/12/2020) ‘On Funded Pension’ (Федеральный закон «О накопительной пенсии»), Federal Law No. 75-FZ of 07/05/1998 (as amended by Federal Law No. 409-FZ of 08/12/2020) ‘On Private Pension Funds’ (Федеральный закон «О негосударственных пенсионных фондах»), Federal Law No. 56- FZ of 30/04/2008 (as amended by Federal Law No. 328-FZ of 01/10/2019) ‘On Additional Insurance Contributions for a Funded Pension and State Support for the Formation of Pension Reserves’ (Федеральный закон «О дополнительных страховых взносах на накопительную пенсию и государственной поддержке формирования пенсионных накоплений»), Federal Law No. 167-FZ of 15 December 2001 (as amended by Federal Law No. 429-FZ of 08/12/2020) ‘On Mandatory Pension Insurance in the Russian Federation’ (Федеральный закон «Об обязательном пенсионном страховании в Российской Федерации»), Federal Law No. 360-FZ of 30/11/2011 (as amended by Federal Law No. 350-FZ of 03/10/2018) ‘On the Procedure for Financing the Payments from Pension Savings” (Федеральный закон «О порядке финансирования выплат за счет средств пенсионных накоплений»), Federal Law No. 256-FZ of 29/12/2006 (as amended by Federal Law No. 451-FZ of 22/12/2020) ‘On Additional Measures of State Support for Families with Children’ (Федеральный закон «О дополнительных мерах государственной поддержки семей, имеющих детей»), Federal Law No. 111-FZ of 24/07/2002 (as amended by Federal Law No. 429-FZ of 08/12/2020) ‘On Investing in the Funded Pension in the Russian Federation’ (Федеральный закон «Об инвестировании средств для финансирования накопительной пенсии в Российской Федерации»); Federal Law No. 389-FZ of 08/12/2020 (Федеральный закон «Об ожидаемом периоде выплаты накопительной пенсии на 2021 год»), Second Part of the Tax Code of the Russian Federation of 05/08/2000 as amended by Federal Law No. 470-FZ of 29/12/2020 (Налоговый кодекс Российской Федерации (часть вторая)).