Russian parliament rules to freeze pension accruals in 2015
MOSCOW, November 26 (RAPSI) – The Federation Council has approved the bill to extend a moratorium on the transfer of pension accruals to non-state pension funds in 2015, RIA Novosti reported on Wednesday.
In early August, the Russian government decided to extend the above moratorium into 2015, under which insurance deductions will be invested in the Pay as you go (PAYG) component of pensions. The decision helped save 243 billion rubles ($5.4 billion) on the transfer to the federal Pension Fund.
Under the bill, in 2015 the total amount of the individual component of the insurance rate (16 percentage points of 22) would be used to finance the PAYG component. Before that, 10 pp of the above 16 pp were used to finance the PAYG component and 6 pp were invested in pension accruals.
The freeze will increase the Pension Fund’s revenue by 307.4 billion rubles ($6.8 billion), which can be used to make regular payments of the PAYG component. The extension of the moratorium will not affect pension rights, because the size of the individual components of the insurance rate will remain intact, while the amount of notional pension capital is to be adjusted to inflation in accordance with Russian law.