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Russian Government Signs Off on Labor Ministry’s New Pension Formula

17.10.2013 14:12 / RIA Novosti

The Russian Government has approved a series of draft pension bills by the Labor and Welfare Ministry, said Labor Minister Maxim Topilin on Thursday.

“The government has approved drafts of the Insurance Pensions Act, the Funded Pension Act and statutory amendments related to the Insurance Pensions Act. This is a package tied to the so-called pension formula”, said Topilin.

According to the new pension formula, entitlement to insurance pension is no longer measured in absolute terms, switching instead to pension coefficients, i.e. points (based on salary, service record and retirement age).

“There are three parameters to qualify you for retirement pension. First, pension age (55 for women, 60 for men). Second, minimum service record, from 2025 it will be a minimum of 15 years (10 years allowed for the transition). Three is a 30-point minimum (a transition period will be provided as well)”, commented the Labor Ministry.

The Ministry says that 30 points are given for transferring the full amount of insurance payments to the Pension Fund, minus the funded part, over a period of 15 years on a double minimum wage or 30 years on a single minimum wage amount.

The Ministry stated that the minimum points limit will rise gradually in the course of 10 years. Thus, in 2015 the minimum pension threshold will amount to 6.6 points, reaching 30 only in 2025. The pension points minimum will de facto increase at a rate of 2.4 points per annum.

Non-state Pension Funds industry reformProject Group №1