The State Duma will consider the next pension reform: who will be affected

Next week, the State Duma will adopt in the first reading a bill on the expected period for the payment of funded pensions. The government proposes to proceed from the fact that, on average, women who have reached 55 years of age in 2023 and men who have reached 60 years of age, as well as a year earlier, will have a chance to live another 22 years, and all this time receive a funded supplement to the insurance pension. Although the life expectancy of Russians has significantly decreased in recent years, the authorities have not proposed a mechanism for reducing the estimated “survival period”.

Employers in Russia allocate 6% of the wage fund to the funded pension of employees born in 1967 and younger. The rules in force now are as follows: when a man reaches 60 years old and a woman reaches 55 years old, everything that was in his savings individual account is divided into what used to be called the “survival period”. This is the number of average months during which he will receive a funded supplement to the insurance pension, established annually by federal law. It is clear that the longer this very “survival period” – the lower the monthly surcharges. Since since 2014 all employers’ contributions to the funded part of the pension have gone to the general fund of the Pension Fund, and not to the employee’s individual account, the funded pension is paid from the funds that were previously credited to this account.

And no, there is no mistake in the previous paragraph: although in 2018 the age of eligibility for the contributory pension was raised to 60 for women and 65 for men, the right to funded payments still arises for women at 55, and in men in their 60s…

How is the lifespan calculated? According to the methodology approved by the government back in 2015. Then it was assumed that from 2023 the calculation of the duration of funded payments would be made based on the current data from Rosstat on the number of Russians eligible for such payments and life expectancy at the moment. In order to get closer to this real statistical value, for several years, the duration of payments was increased annually by 6 months every year. For 2021, it was set at 264 months (22 years). But then the pandemic began, life expectancy, according to Rosstat, decreased, and for 2022 the government proposed leaving the “survival period” the same: the same 264 months. Because in the calculation methodology there is such a rule: if in some year the Russians begin to live less, then the next year everything remains as it is. Frozen.

The bill, which proposes to extend the “freeze” of the period of payment of the funded pension at the same level of 264 months, to 2023, was submitted by the government to the State Duma in October, and the first reading is scheduled for November 23. At a meeting of the relevant Duma Committee on Labor and Social Policy on November 17, where this initiative was discussed, Andrey Pudov, a representative of the government, deputy head of the Ministry of Labor, did not go into details, and the deputies did not ask him anything.

At the same time, the committee’s conclusion notes that “in the accompanying documents to the bill, there is no information that was used in the calculation of the indicator established by federal law.” And based on the Rosstat data requested by the committee, the document further states, the life expectancy of men who have reached the age of 60 years was 14.42 years, and women who have reached the age of 55 years – 23.22 years, and the number of the first as of January 1, 2022 the second year was 912,387, and the second – 936,463. If we calculate according to the methodology of the government, then the period of payment of the funded pension for 2023 calculated according to the actual statistics will be 227 months …

That is a little less than 19 years old.

Yes, the rules established by the same methodology require not to reduce the “survival period”, leaving it at the same level, if the indicator based on real data is lower than that of the previous year, the committee agrees, and proposes to support the concept of the government bill: formally, you won’t find fault, All based on laws and by-laws. But at the same time, he draws attention to the fact that there are still no “provisions in the government’s methodology that allow reducing the indicator of the expected period for paying funded pensions,” although from 2021 to 2023 it has actually decreased by three years already. “Thus, this shortcoming of the calculation methodology will have a negative impact on the pension rights of funded pension recipients, especially if unfavorable trends affecting life expectancy continue,” the committee concludes…

That is, monthly allowances will be less than they could be. And the chances of living 22 years after the start of payments for those who become eligible for them in 2023 are also less.

Summing up a brief discussion, the head of the Committee on Labor and Social Policy, Yaroslav Nilov (LDPR), recalled that mechanisms are now being “considered” about the possibility of a lump-sum payment of all the money that is in the savings account to a larger number of Russians. The fact is that now citizens have the right to receive all the money from this account at once only if the amount of the monthly payment calculated taking into account the “survival period” is less than 5% of the amount of the insurance pension, together with the supplement. A group of deputies from the LDPR faction and senators actually submitted a bill to the State Duma back in August, which proposes to pay everything at once if the amount of the monthly funded allowance does not reach 20% of the pension. Why? Firstly, “monthly funded surcharges of 250-500 rubles are wrong,” Mr. Nilov told MK. And secondly, when the Pension Fund determines whether a particular citizen has the right to pay all the money from the savings account at once or not, he is forced to carry out, as the explanatory note to this bill says, “make virtual calculations” – after all, to determine whether the monthly funded supplement is more or less than 5% of the total pension, falls five years before the insurance pension is calculated. The government has not officially expressed its opinion on this initiative.

In the draft budget of the unified Social Fund (from January 1 it will unite the Pension Fund and the Social Insurance Fund), which will be adopted in the second reading on November 22, funds for the payment of funded pensions to those who reach the required age in 2023 and whose funded accounts were managed by the state, calculated according to the old formula. That is, the amount of the accumulative supplement in 2023 will be determined by the “survival period”, which is not related to the real one.