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"The state has issued for Free..."
Material posted: Publication date: 08-06-2014

To date, 37 non-state pension funds (NPF) has launched the procedure for corporatisation. In these funds are more than 85% of the pension savings of Russians in private pension funds. 20 of them have already submitted all the required documents for approval, of which 11 managed to obtain permission from the Bank of Russia to joint-stock companies. It would seem that since the new year the market of private pension insurance in Russia is again working at full force. But there is one circumstance. There is a high probability that officials will again want to use a tested mechanism of withdrawal of funds of pension savings.

By a strange coincidence, the retrieval was named "moratorium" that has created false expectations not only among ordinary people but also from people very experienced in pension matters — lawyers, executives, Nppaw and asset managers. Recently in mass media there was information that the first faces of some of the corporations proposing to the government to use pension funds of the citizens to replace the foreign currency debts of state corporations under their control, as well as on the long-term infrastructure projects is difficult to assess risk and profitability are not clear yet.

Case of 500 billion

Corporatization and the entry of NPF in the guarantee system of pension savings — the main condition for the transfer of future contributions to a fully funded system. Simply put — future receipts of funds to the savings account of citizens in Npfag, which to date have concentrated about half of all pension savings. This year on retirement accounts the Russians have not yet received a penny. Contributions paid by employers went to the revenues of the state budget, but were not included in the cumulative pension system.

For some reason there is a perception that the money, the total amount which according to various estimates reaches 500 billion rubles, citizens under the age of 47 years, then come back through the savings account. Case, they say, need only Npfam become joint-stock companies and enter into system of guaranteeing savings. However, this is not the case. Means the Russians took from the storage part, and promise to compensate through distribution part of the pension. But the Federal budget (and in an expanded budget for 2014-2016) such expenditure does not provide. One can only hope that the state will return the savings accounts of citizens funds frozen in the last six months of 2013.

Moreover, judging by official statements of representatives of Centrobanca, there is concern that a "moratorium" on the functioning of the accumulative pension system will be extended for 2015. Why else would the first Chairman of the Central Bank Sergey Shvetsov at the end of may called the representatives of the NPF once again to defend the interests of working citizens from encroachments by officials of the social block?! But even if the "moratorium" would not be renewed, questions still remain.

For example, the money for the second half of 2013 the state will return to the citizens on the nominal value or, yet, credit them with some income? After all, if the "moratorium" was not, and these funds were at the disposal of SPC, the citizens on his or her savings could receive up to an additional 6 to 8 percent per annum. If they were in accounts in the state management company – VEB, some smaller. But it also would be income. It turns out that the Russians are funding their own state free of charge.

In the circle of leaders of the NPF there is a sad joke that the necessity of corporatization of pension funds and their entry into the insurance system were only a smoke screen that allowed to select from the population of about 500 billion rubles. And make it so that almost nobody noticed. And all this happens for one reason. In Russia, unlike other countries with funded pension system, the right of ownership of citizens to their retirement savings — or, in the language of the layman, "savings for old age" is not written into the law.

Casuistry proper language that is de jure pension funds in Russia is wrong to call it savings. It is a contradiction to explain. In many countries where there is a funded pension, for example, in the Netherlands, Chile, Mexico, and even in Kazakhstan, the funds paid into funded pension system, become the means of citizens to the special pension account. In our country the status of pension savings of the changes in their lives: first, as soon as these funds are paid by the employer, they are recorded in the form of state funds in the revenue side of the budget, then they fall into the expenditure side of the budget (if they are registered in the budget of the corresponding year) and go to FIU. There through the books already listed, as money belonging to the state pension Fund. And then their status changes again. According to the current accounting they become NPF funds or funds management company.

Citizen takes title to the money only at the time of the awarding of a pension or payment to the assignee (in the case of death of the insured until retirement). And it's such a complicated scheme and enabled the government to take money from the Russians without any consequences. Although formally the citizen is still free to choose who will manage his pension savings, the fact that right this year has deprived. If pension "moratorium" will last into next year, future retirees be waiting on the new pension formula.

Points instead of money

Last fall, when the idea of retirement "moratorium," only discussed in the government, Minister of economic development Alexei Ulyukayev said that frozen pension funds back to the accounts of citizens. And they will be credited with income at 7 percent per annum. But now officials say the money will be taken into account in the new pension formula and will be paid after the assignment of pensions for the current citizens. But how to do it, it is not yet clear.

The fact that the new pension formula (which will apply from 1 January 2016) no options, denominated in money. And there are only odds and scores. And to recognize the withdrawn contributions pension savings in 2014 and return in the distribution system through the prism of the new pension formula is highly problematic.

New pension formula, developed in February-March 2013 the social block of the government, had already several times changed. The first versions of the new formula appeared conditional points instead of numeric coefficients. This is a very complicated understanding of the calculation of future pensions for citizens. It is clear that the purpose of the new pension formula was initially balancing the need for the insurance part of the pension system. Today, about 40 percent of the revenues of the FIU is the transfer from the Federal budget. Its value is determined by the parameters of the budget for the next three years. And it's not estimated, and found a compromise between the proposal of the Ministry of Finance and the Ministry of labor.

Thus, in the last edition of the new pension formula score is already is a little predictable and depends on subjective factors: manual control and political will. To determine this value further three years is impossible. Of all citizens of the promised "bonuses" the government has left only the higher rates for later retirement part of the pension insurance is rising in 1,45 times, if you postpone retirement for 5 years, and 2.3 times if for 10 years. In this scheme, it turns out that the person who has worked 30 years before retirement, can accrue less pension than the man who spent 27 years (including 17 years before reaching the retirement age and 10 years of work experience after reaching the retirement age).

This heterogeneity is caused by the years of employment after reaching retirement age in the new pension formula more significant impact on the pension than years of employment before reaching retirement age. On the one hand, it is veiled to raise the age of retirement of the Russians. And on the other, this configuration violates the principles of social justice. Citizen with extensive work experience, may receive a smaller pension (at the same salary).

Served in the army men will also receive a smaller pension than citizens who have not served in military service. Will affect the amount of a pension downwards and maternity leave of women. But the main feature that showed retirement calculator is the fact that adequate replacement rate for the middle class, not working in the civil service, will not work (will be 11 to 19 percent with the average parameter on Russia for 25 percent and 40-50 percent in Europe). That is, to produce adequate for the needs of the pension representative of the middle class still have to save yourself. Moreover, regardless of the expectations on pension granted by the state. Importantly, although the state would not interfere.

Alexander Baranov


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