Pension System

Pension savings within the mandatory pension insurance (MPI) system are primarily formed through insurance contributions.

Until 2014, their main source was mandatory employer contributions. Currently, all insurance contributions remitted by employers to mandatory pension insurance are directed toward insurance pensions, while savings within the MPI system are formed voluntarily using additional insurance contributions paid by citizens on their own or via employers, as well as using maternity (family) capital funds (or a portion thereof) and investment income generated from the investment of pension savings.

There is also a non-state pension, which is formed within the non-state pension provision (NPP) system.  The NPP system is autonomous and supplementary to the MPI system, and it is implemented by non-state pension funds (NPFs). A citizen selects a program offered by a particular NPF, enters into an agreement with it, and pays contributions under the chosen program on their own. NPFs also offer corporate pension programs for organizations and their employees.

Non-state pension provision differs from mandatory pension insurance in its pension accumulation and payout conditions: in the MPI system, they are determined by the state, while under NPP, they are governed by the agreement and pension rules.

Citizens whose pension savings are formed within the MPI system have the right to choose an insurer and transfer these funds to it for investment in the financial market. The selected insurer is liable to the citizen for the determination and payment of the funded pension. The insurer may be the SFR (Social Fund of Russia) or an NPF that is a member of the state system for guaranteeing the rights of insured persons. The SFR invests pension savings through the state management company and through private management companies (MCs). A citizen who is accumulating pension savings in the SFR can choose an MC to invest their pension savings. If the savings are accumulated in an NPF, then the choice of the MC is made by the insurer (NPF).

The choice of an insurer is a personal decision of each citizen. A change of an insurer occurs when transferring from one NPF to another, or when transferring from the SFR to an NPF and vice versa. When transferring pension savings from the state management company to a private one, as well as when choosing another MC, a change of the insurer does not occur — the SFR remains the insurer.

A citizen may exercise the right to change their insurer annually (early transition). However, the most advantageous option is to change the insurer every five years. In the event of an early transition, there is a risk of losing a portion of pension savings. If an application for transition is submitted in 2026, the transfer of pension savings to the new insurer will be carried out in 2031:

• in the event of a positive investment result, the actually accumulated pension savings, including investment income, are transferred to the new insurer;
• in the event of a negative investment result, the actually accumulated pension savings are transferred taking into account the guaranteed replenishment, i.e. the investment loss is replenished by the insurer.

The differences between an application for (five-year) transition and an application for early transition lie not only in the timeframes for reviewing such applications, the timeframes for transitioning to a new insurer, and the timeframes for transferring pension savings, but also in the procedure for calculating the pension savings to be transferred to the new insurer. If a citizen makes a change of an insurer more than once every five years, they may lose a portion of their pension savings. If the insurer of a citizen is the SFR, a company or an investment portfolio of the management company can be changed annually without loss of investment income. You can find out which insurer is responsible for forming your pension savings, obtain information about the amount of their pension savings, and the results of their investment on the Unified Portal of State and Municipal Services (Functions).

The SFR provides citizens with information on the results of investing pension savings for the periods when the SFR was their insurer. If their insurer is an NPF, the information on the results of investing pension savings should be requested there.

The funds of pension savings formed by citizens in the SFR and NPF are insured. The system of guaranteeing the rights of insured persons has been functioning since January 1, 2015. Its purpose is to ensure the rights and legitimate interests of citizens and to establish the liability of all participants in the MPI system for the safety of pension savings. Participants of the system are organizations that carry out mandatory pension insurance. The SFR and NPF make annual contributions to the pension savings guarantee fund, which is managed by the Deposit Insurance Agency (DIA). The Agency reimburses from it any shortfall in accumulated funds in the event that an NPF’s license is revoked by the Bank of Russia, or upon the occurrence of another guaranteed event. In addition, it is envisaged to replenish the deficit of funds from the provisions for mandatory pension insurance created by the funds themselves.

The list of non-state pension funds that were included into the system of guaranteeing the rights of insured persons is posted on the websites of the Central Bank of Russia cbr.ru and the Deposit Insurance Agency asv.org.ru.

Payment of pension savings is carried out as follows: As a general rule, pension savings are paid to men from the age of 60, and to women from the age of 55, except for those who are assigned an early pension. They can submit an application for payment of savings earlier. The following payments are effected from pension savings:

•  lump-sum payment;
•  payment of the funded pension (indefinitely);
•  term pension payment;
•  payment to the legal successors of a deceased citizen.

Lump-sum payment. All savings are paid out as a lump sum. Such payment is established if the calculated amount of the funded pension is 10% of the federal minimum subsistence level of a pensioner or less.  In such a case, a citizen who has exercised the right to a lump-sum payment has the right to apply for it again if new pension savings are deposited into their individual personal account in the future. This can be done no earlier than five years from the date of the previous request for a lump-sum payment.

A lump-sum payment may also be fixed for citizens who are recipients of an insurance pension or a social pension. A lump-sum payment is made if the person has not acquired the right to receive a funded pension. Lump-sum payment is not made to those persons who were previously granted a funded pension and/or a term pension payment.

Payment of the funded pension (indefinitely). It is established if the calculated amount of the funded pension is more than 10% of the federal minimum subsistence level of a pensioner. In 2026, the calculation is based on the expected pension payment period of 270 months. To calculate the monthly amount of the funded pension, it is necessary to divide the total amount of pension savings as of the date from which the payment is assigned by 270 months.

Term pension payment. The citizen determines the duration of this payment on their own but it cannot be less than ten years. And it is made not from any pension savings, but only from that portion of funds formed through specific sources:

• contributions under the state co-financing pension program, including state co-financing contributions, employer contributions for program participants, and income from their investment;
• maternity capital funds directed towards the formation of pension savings and income from their investment;
• additional insurance contributions for saving that were voluntarily paid by citizens or their employers.

An application for payment from pension savings (in the form of a lump-sum payment, a funded pension, or a term pension payment) must be submitted to the insurer with which the pension savings were formed: either the SFR or the relevant NPF.

The amount of the funded pension will be higher if a citizen applies for it after the acquisition of the right. In this case, the expected period of payment of the funded pension is reduced by 12 months for each full year that has elapsed from the date of acquisition of the right to the assignment of the specified pension. Moreover, since 2015, the expected pension payment period cannot be less than 168 months.

Payment of pension savings to the legal successors of a deceased citizen. Pension savings formed in the MPI system, in the event of the death of their owner, may be paid to the owner’s successors.  The latter should contact for this effect the insurer that formed the savings: the SFR or the NPF. The relevant application should be submitted no later than six months from the date of death.