New pension system being developed in Russia

Russian Finance Minister Anton Siluanov said at the Moscow Financial Forum that the Russian Central Bank and the Finance Ministry are jointly developing a new mechanism for voluntary contribution pension system.

"Next year we don’t plan to return to the old system of pension savings we used to have three years ago," Siluanov pointed out.

"This year and the next with the Central Bank we will be discussing and developing a new system of voluntary contribution pension for citizens," he said.

The head of Research Center for pension systems and actuarial prediction of the social sphere of the Institute for Social Analysis and Forecasting at the Russian Presidential Academy of National Economics and Public Administration, Elena Grishina, speaking with a correspondent of Vestnik Kavkaza, commented on the rejection of the current pension system with the division for the insurance and accumilative parts.

"We have not managed to get a sufficient level of pension savings during the existence of the current system. A challenge was to ensure in the long-term that the accumulative pension to be more than insurance one, and provides a high level of pensions as a whole," she said.

The current popular system was not popular among Russians. "One of the major problems is a low level of material support of a large proportion of citizens. The system of long-term pension savings doesn't make sense for all categories of the population: for those earning less than a living wage, the issue of formation of pension savings in the long term is irrelevant, the issue of how to make their money last until payday is more important for them," Elena Grishina noted.

"The system would work if our country has a sufficiently large proportion of the middle class people or those above average. But in our situation it is necessary to try to raise the level of material security of the population as a whole, while carrying out reforms. If the poverty rate remains high, people simply will not be able to accumulate money and any reform in the accumilative system will not be effective," the expert added.

Speaking of what the Ministry of Finance and the Central Bank can offer to the Russians in 2018, she voiced the option of co-financing the accumilative part by the state. "In order to attract people to the accumulation, the co-financing of deposits by state is necessary to increase their attractiveness. We should remember that there are people with wages affected by seasons and unstable employment is also important. If the state allows to make deposits with varying frequency, it will help to increase their volume. The practice of using pension savings in the process of accumulation. They can be spent on treatment, education or property abroad. This measure increases the population's interest in the pension accumulation," Elena Grishina said.