New voluntary pension savings system with state guarantees to take effect in 2017-2018 - MinFin
MOSCOW. May 17 (Interfax) - A new pension savings system which should re-launch the frozen funded portion of pensions, might take effect in 2017-2018, Russian Finance Minister Anton Siluanov said.
"This year we are drafting all the necessary decisions in detail, I'm hoping it will be in the second half of 2017 or from 2018," Siluanov said in an interview with the Rossiya 24 TV channel, when asked when the new system devised by the Finance Ministry and Central Bank, might start to work.
"This is a new vision of the funded portion of the pension system," he said.
"We are saying that people in the workforce need to take responsibility for their future. The current level of pension funding allows us to have pensions averaging 12,000-13,000 rubles per month. Those are of course small amounts; given the insufficiency at the Pension Fund of Russia, this is what can be afforded using the insurance contributions made by employers for their employees. Employees need to understand that if they don't take part in pension funding, the pension level will be what it is today," Siluanov said.
"For this reason we have prepared proposals to make it possible to clearly define how this will take place: formation of the pension accumulations, how to use this resource, how these funds will be reported. In order to reconstitute this system, we are saying that individuals must form such accumulations themselves, have a clear understanding of how much they have accumulated, that this money can be bequeathed, these amounts can be withdrawn for certain purposes once a given threshold has been reached. A whole host of innovations that operate in other countries and are a serious financial support for someone entering retirement," he said.
This will be a voluntary funding system, "with gradual introduction."
"We believe that pension accumulation accounts can be opened either at pension funds or at commercial banks. These will be absolutely reliable investments, because they will be guaranteed by those instruments that operate for bank accounts today. The funds are part of a person's estate, we are proposing making it possible to withdraw funds from this account [for example, to pay healthcare costs, given that a certain amount has been amassed]," he said.