The Bank of Russia has updated the basic standard for non-state pension funds, effective from July 2021

The Bank of Russia has updated the basic standard for non-state pension funds, introducing a two-week “cooling-off period” when concluding non-state pension agreements. Now NPF clients who have signed an agreement will have the same time to change their decision as potential bank borrowers. The new requirement for funds to provide potential clients with a more detailed key information document is also intended to reduce the number of spontaneously concluded contracts.

The Bank of Russia has updated the basic standard for non-state pension funds, effective from July 2021, follows from document, posted on the regulator’s website on Monday, February 5. The new version of the document introduces a “cooling period” of 14 days, which will apply when concluding non-state pension agreements (NPO). A two-week deferment will be available to those who enter into a contract for the first time, including through an agent. Previously, only some non-state pension funds voluntarily applied such practices, the regulator points out. The new standards will come into effect 90 days after the publication of the document, that is, from May 4, 2024.

According to the Central Bank, in the nine months of 2023, almost 120.5 thousand people entered into pension agreements with non-state pension funds. “A client may have several such agreements in one NPF or several contracts in different NPFs, and each one will be subject to a cooling period of 14 days upon conclusion,” explains Kommersant’s interlocutor in one of the NPFs. At the same time, there are no “other cases” for NGOs: unlike OPS, these savings are not transferred between funds, the client simply enters into a new agreement with another fund, and in accordance with the requirements of the Central Bank, this money is immediately credited to the client’s account.

If the client decides to terminate the contract for some reason, the NPF will simply close his account and return the funds, Kommersant’s interlocutor describes the mechanism of work.

However, according to the funds’ documents, the NPF will return the redemption amount to the client, consisting of the amount of contributions during the time spent in the fund, income from investing the fund’s funds, minus the pension payments made. Moreover, the amount of contributions is assessed taking into account the period of participation in the fund (the adjustment coefficient can be 0.5–1), the income from investment – taking into account the period of placement of funds in the fund (the coefficient can be 0–1).

Also, in accordance with the new document of the Bank of Russia, NPFs will be required to “add more information to the key information document (KID), which clients receive before concluding an NPO agreement.” So, now this document must contain a section on “a system of guarantees in case a non-state pension fund goes bankrupt or its license is revoked, indicating the amount of compensation and the procedure for payments.”

In fact, clients are subject to practices taken from other financial markets – obtaining a loan, purchasing investment products – to prevent misselling, Kommersant’s interlocutors agree (see “Kommersant” dated July 26, 2023from February 8, 2022). “A cooling-off period in the financial services market with the participation of an intermediary is a natural necessity. This measure is one of the steps to increase the level of customer confidence in the funds’ pension products,” noted NPF Future. However, this is also important for non-state pension funds themselves. “This allows funds to work with clients who have made a conscious decision to form long-term savings over a long period,” the fund explained.

Polina Trifonova