Old Age Insurance Pension Scheme

Mandatory insurance

• Persons working under an employment contract or under a civil law contract for the provision of services or the performance of work and under other specific types of civil law contracts.
• Civil servants.
• Self-employed persons, including specific groups such as advocates, private detectives, notaries, farmers.

Voluntary insurance

• Non-employed persons; persons working abroad; self-employed persons who fall under a special tax regime, i.e. ‘a tax on professional income’ (налог на профессиональный доход).

General finances

• Mainly PAYG-financed from insurance contributions.
• Partly tax-financed out of the general federal budget (fixed lump sum payments defined by law).

Contribution rates for mandatory insurance

• The contribution rate is 22% for incomes up to a defined threshold (RUB 1,292,000 in 2020); the contribution rate for the amount of earnings exceeding the threshold is fixed at 10%.
• Contributions are paid fully by the employer.
• If persons opted into the funded pension  scheme, they can pay 6% of the total contribution towards its financing (this option is suspended from 2014 until 2023).
• The self-employed pay the total contribution themselves once per year in the form of a lump sum amount.
• Since 2013, additional contributions for employees who work under harmful and dangerous conditions have had to be paid by employers; contribution rates range from 2% to 8% of monthly gross earnings depending on the degree of hazard of the working conditions.¹

Contribution rates for voluntary insurance

• If the yearly income is not more than RUB 300,000: a lump sum amount of RUB 32,448; if the yearly income is more than RUB 300,000: a lump sum amount of RUB 32,448 and 1% of the payer’s income above RUB 300,000.

• The Pension Fund of the Russian Federation manages the scheme.
• The Federal Tax Service collects contributions, observes the correctness and timeliness of contribution payments.

Qualifying conditions

• Standard old age pension: statutory retirement age increases to 60 until 2034 for women (born after 1974) and to 65 until 2028 for men (born after 1962); minimum insurance period in the mandatory pension insurance: not less than 11 years in 2020; increases to 15 years in 2024; individual pension coefficient: not less than 18.6 in 2020; it increases by 2.4 every year until it reaches 30.

Early retirement

• Available up to 24 months prior to reaching the statutory retirement age but no earlier than age 55 for women and age 60 for men; required insurance period in the mandatory pension insurance: 42 years for men and 37 for women, without permanent adjustments to pension benefits.
• Special early retirement regulations apply to: employees working under hazardous conditions (dangerous, harmful and arduous work); test pilots; persons who have worked in the regions of the Far North; mothers of three or more children (or two or more children if she has worked in the regions of the Far North); parents of children with congenital disability.

Deferred retirement

• Retirement can be deferred with positive pension adjustments (as gradual increases in pension coefficient and in the fixed flat-rate pension payments per year).

Combining employment & retirement

• Termination of employment is not a precondition for claiming pension benefits.
• After reaching statutory retirement age employment is permitted without earnings limit; benefits of working pensioners are not subject to indexation adjustments.

Pension benefits

• Primarily based on the amount of contributory earnings throughout working career, including pension-credited periods of e.g. child-raising. Each old age insurance pension includes a fixed flat-rate payment.
• No specification in law regarding fixed minimum and maximum amount of pension benefits.

Benefit calculation

• Based on the multiplication of the individual pension coefficient and the value of one pension point in the year of assignment of the insurance pension plus the fixed flat-rate payment which is equal to RUB 4,982.90 per month in 2020.
• Individual pension coefficient: a parameter that reflects pension rights of the insured person taking into account: the insurance contributions accrued and paid to the ‘Pension Fund of the Russian Federation’, the duration of the insurance period, and potentially the period for pension deferral.
• Adjustments: yearly adjustment of pension value accounting for changes in the inflation rate.

Taxation and social security contributions

• Pension benefits are not subject to taxation.
• For non-working pensioners: contributions to health insurance are covered by the executive bodies of the subjects of the Russian Federation from the state budget.
• For working pensioners: contributions to health insurance, pension insurance and insurance against work accidents and occupational diseases are mandatory.