Acting PFR head Sergey Chirkov on Pension Fund’s merger with Social Insurance Fund.
Over 32 years of its existence, the Russian Pension Fund (PFR) has undergone a complex transformation from an entity paying pensions and benefits to an entity providing services throughout a person’s life, from birth to old age. A natural next step in these transformations is the merger of two funds: the Pension Fund and the Social Insurance Fund will be merged into the Social Fund of Russia in 2023. Acting Chairman of the PFR Board Sergei Chirkov has told TASS how the merger is going, what will change for people in 2023, how Fund offices have rid of waiting lines and facilitated the provision of services, and what development plans the Fund has.
— The merger of two funds, the PFR and the SIF, is a principal social security event of the year. How is the work going and are there any problems? For how long will the transition last?
— An ad hoc project office comprising representatives of both funds is coordinating the merger between the Pension Fund and the Social Insurance Fund. This working group meets every day to address aspects of the merger, including the integration of client services, property, the shift to unified accounting, etc.
We have synchronized the schedule of appointments and have started to retrain employees to be providing services at joint offices. PFR specialists are learning how to provide services of the Social Insurance Fund and vice versa. The retraining will end in October, and internships will begin. That will increase the number of offices where citizens can get every benefit they are entitled to at once.
The merger will be over by the end of this year. If we take a broader look at the process, this is a transition to a unified digital platform. This system will cover every life situation, including pension entitlements or the status of a mother of many children or a labor veteran. Specialists will automatically receive information as to who aspires for what and will be able to proactively provide this information to people. When we shift to this system, we will be able to say that the transition is over.
— The budget will be combined as a result of the funds’ merger. How has it been drafted? How will the fund’s expenses change?
— The budget of the joint fund will exceed 13.5 trillion rubles. This is a sum of all benefits paid by both funds: pensions, maternity capital, pregnancy or accident benefits, etc. Naturally, there are plans to increase all payments.
Starting next year, there will be a unified rate of contributions and a unified base for the payment of pension and social insurance contributions. The rate was higher at the PFR compared to the SIF before. This will also lead to a growth of payments, for instance sick leave benefits will increase thanks to the broader base. People working under civil law contracts will also be entitled to sick leaves. All categories were entitled to pension benefits in the past, while only people with labor contracts qualified for social insurance. For instance people working under civil law contracts had no right to maternity leave. Now, everyone will be insured and the contribution base will be the same. Indeed, this is advantageous for people.
— The merger has become possible thanks to the extensive automation of many processes — the proactive assignment of benefits and the facilitated submission of applications – among other factors. What are the results of this work and what are the plans of its further development? What else does the joint Social Fund plans to implement?
— Importantly, we prioritize public convenience rather than automation per se. For instance, in the past pensioners were assigned by request. A person needed to present a workbook, documents, certificates, etc. What happens today? We gathered information about pension entitlements, including Soviet-era work records. It was a challenging work. Problems rarely occurred with the work record of young people, while the Soviet-era work record was fully based on paper – certificates, archived documents and so on. Now, most retirees have all information necessary for the assignment of pensions in their accounts.
We have been proactive in the assignment of disability pensions since this year; more than 200,000 benefits of the sort have been assigned, and the work has been quite successful. We also proactively issue maternity capital certificates. When a woman gives birth, we receive information from a civil registration office, and our specialists issue a certificate and send it to the mother’s account on the public services portal. Over 2 million certificates have been issued proactively to date.
As for the payments that still require application, the Pension Fund is also trying to do everything by itself. For instance, an application for payments to children aged from 8 to 17 needs to be filed on the public services portal, and further processes are launched automatically. The PFR asks the Federal Tax Service for information about the income of parents and children to assess the family assets. It also asks Rosreestr about the family property. The Interior Ministry tells the Fund whether the family owns a car, and the Emergency Situations Ministry reports the possible ownership of a boat. The comprehensive assessment is quite effective, and our offices assign 99% of payments within ten business days.
So, the main principles of our development are proactivity and public convenience. We are drafting proposals on further development of this approach. For example, the government has submitted a bill to the State Duma, which will allow the Fund to proactively assign survivor pensions to children without the submission of documents in this difficult life situation. We are expecting to assign pensions to orphans and to increase pensions for work in the north or in agriculture in the similar automatic format, so that the pension is enlarged as soon as the pensioner acquires the relevant work record, without filing an application.
— Optimization is a goal of the merger: employees of both funds will keep their jobs but can we speak about vacant buildings and cost reduction? How much?
— The merger of the funds is not a mere combination of the existent entities. This is optimization, which implies the release of resources and the saving of funds. This applies to practically every sphere, including territorial infrastructure.
We will start saving funds as early as next year, for instance, by paying less for the rented premises and buildings. We are expecting to vacate over 500 rented premises thanks to the optimization. That will save about 200 million rubles a year, or maybe more as time passes.
— How will client centers change and will they be reequipped? When will people be able to visit them?
— We are already transforming PFR and SIF client centers into one-stop shops. Pilot projects, in which specialists from both funds provided services together, have been accomplished in several regions. Four services of the two funds were available in practically all PFR and SIF offices since June. It was possible to apply for technical means of rehabilitation of disabled persons and a health resort voucher, to choose or change the pension delivery method, or to receive a certificate of pension entitlements. Fifteen thousand applications of the sort have been filed over the past few months.
Speaking of Pension Fund client services, they provide up to 10 million services per year to citizens visiting them in person. The offices are fully equipped, they have functional waiting, service and information areas, alongside digital zones with self-service terminals. Visitors can use the terminals while waiting for their appointment or even receive the service they are seeking on their own. Administrators provide the necessary assistance.
All the best service practices developed over years will be retained by the future joint services, same as the geography of their presence. Citizens can visit the offices as they were. Besides, we are upgrading the client service format with due account of the digital transformation of social services.
— The absence of waiting lines in client service is an achievement of the Pension Fund. How did you do that and may waiting lines reappear in the joint fund?
— We achieved the result by the methods usual for the modern world, mostly online service. A special procedure was put into place during the pandemic, and we were receiving applications even by phone. We identified a person by the code word, and operators were able to register applications for payments.
On the whole, we have been developing remote and online services for a long time. Now, nearly every main service of the Fund can be requested remotely. At the same time, we do not limit in-person visits. The joint fund is a socially oriented organization, and we are honored to receive every client. Those who feel comfortable using online services do so, while those who wish to pay a personal visit can do that. We try to make their visits as swift and comfortable as possible.
We always make preparations, which begin with an appointment made on the website or by phone. The service is used by 70% of Fund visitors. While making an appointment, specialists ask about its purpose and propose an alternate solution whenever possible. They suggest step-by-step how a person can receive a service without visiting. The same is done at the office. A client service administration provides consultations to a person who does not have an appointment and helps use a terminal if necessary.
Please note that we provide a large number of services in the exterritorial format, irrespective of a person’s place of residence. We also try to give comprehensive services and offer the payment of all benefits to which a person is entitled as a pensioner, a disabled person or a parent at once, rather than the requested benefits alone. All this experience will help us organize service after the funds are merged.
— The president recently signed an order, which allows spending maternity capital funds on paying for services of kindergartens registered by individual entrepreneurs. How much, in your opinion, will this option be in demand? How often do Russians spend the funds on education?
— The education of children is the second most popular way of spending maternity capital, after an improvement of living conditions. This is logical: families solve accommodation problems at first and think about education as children begin to grow. The dynamics of applications for an improvement of living conditions has been steady over years, while we are constantly seeing a growth in the number of families that wish to spend the funds on services of a kindergarten or a school. We are responding to the demand and are trying to develop this area.
The Pension Fund facilitated the spending of maternity capital funds on education two years ago. In September 2020, PFR offices across the country started to conclude agreements with higher educational establishments, colleges, and preschool institutions to request information about education agreements. In the end, most parents do not have to provide such information themselves. Nowadays, 27,000 educational establishments and regional and municipal institutions inform the PFR about their students.
We broadened the possibility of spending maternity capital funds on services of individual entrepreneurs by this school year. Now parents can spend the funds on private kindergartens and activities organized by individual entrepreneurs, as well as tutors or child care agencies. The main condition is that individual entrepreneurs are licensed by Rosobrnadzor to provide education services. Pension Fund specialists verify this information, alongside entrepreneurs’ registration with the Federal Tax Service on their own. So, it is rather easy for parents to spend the funds – all they need to do is file an application with an attached agreement for commercial services.
— How many families have received maternity capital to date and what are the main areas of its use?
— The Pension Fund has issued 12.5 million maternity capital certificates, including 1.1 million certificates for the first children. Our territorial offices have proactively issued over 2 million certificates. Meanwhile, we have received 11.2 million applications from parents for spending maternity capital funds in key areas. Seven million families, or over a half of those who received maternity capital, have fully spent their funds.
Most frequently, parents spend maternity capital funds on buying or building a home. We have received 8.7 million applications of the sort since the time the program was launched, which is 78% of all applications. Children’s education is the first runner-up with over 1.5 million applications filed to date, in addition to monthly benefits for the second child. We are paying these benefits to 247,000 children now, and the total number of such applications nears 1 million.
— Starting 2022, the PFR has been proactively informing citizens aged 40 and 45 about the status of their pension account and the work record. How many citizens have received such notices?
— Indeed, we started to proactively inform Russians about pension entitlements and requirements for the assignment of pensions this year. As of this moment, notices have been sent to over 8 million people, men older than 45 and women older than 40. The information is sent to accounts on the public services portal. It includes the available pension entitlements, including the work record and pension points, and, most importantly, the size of pension based on these parameters. This helps people plan their further work.
— A new way of supporting families with low income – benefits to children aged from 8 to 17 – emerged this year. How many families have received such payments? What is the total sum of payments?
— The filing of applications for the monthly benefit to children aged 8 to 17 via the public services portal, territorial offices of the Pension Fund, and multifunctional centers began in May. Benefits have been assigned to almost 5 million children, and the overall payments to families exceed 315 billion rubles.
— A universal benefit to poor families with children is an innovation proposed by the prime minister from 2023. How will it be assigned? What families will quality, how many children will be included, and how much funds will be necessary?
— The new universal benefit will be introduced on January 1 for poor families with children and pregnant women. This benefit will combine the existent benefits to poor families and will include new categories of beneficiaries. An integral system of support for families, which begins at the time of pregnancy and ends when the child turns 17, will be built.
We are practically ready for the new benefit, as it will be assigned by the procedure well known to Fund specialists. About 10 million beneficiaries are projected to be eligible for the universal benefit. The funds have been committed. On the whole, the Fund budget for 2023 allots 1.9 trillion rubles for the protection of families and children.