What will change in Russia from October 1: salaries, pensions, allowances

Increasing the monetary allowance of the military and security forces

From the beginning of October, the monetary allowance of military personnel and employees of law enforcement agencies will increase by 4 percent. The increase will affect the military, employees of the National Guard, internal affairs bodies and the penitentiary system, the fire service, bailiffs and customs officers.

comments Ivan Samoilenkomanaging partner of B&C Agency:

“At the end of the year, the government expects inflation at 12%, taking into account its seasonal growth in the fourth quarter of this year. Raising the salaries of the power bloc by 4% is probably what the government can really allocate from the budget now. Surely this decision will be reviewed from the New Year and the military will receive indexation within the framework of inflation throughout the year.”

Increasing the salaries of state employees

From October 1, according to a government decree, the wages of employees of state institutions, as well as civilian personnel of military units, will increase by 4%. An increase at the expense of the federal budget awaits: employees of federal state, budgetary and autonomous institutions; employees of federal state bodies, as well as civilian personnel of military units, institutions and subdivisions of federal executive bodies, in which the law provides for military and equivalent service.

Ivan Samoylenko, managing partner of B&C Agency, comments:

“In the country, several million citizens work in state institutions, their wages are often calculated from the minimum wage (plus various additional payments, bonuses, etc.). Of course, a salary increase will be relevant for them, even if only by 4%. And there are a lot of serving civilian personnel at military facilities, and the government is doing the right thing, which, in parallel with raising salaries for the military, also does this for civilians who are somehow involved in defense.”

Changing the procedure for calculating military pensions

From October 1, the amount of monetary allowance for calculating the pensions of military pensioners and former employees of law enforcement agencies will be increased. The increase will affect approximately 2.5 million former military personnel, employees of the internal affairs bodies, the Russian Guard, the State Fire Service, the Ministry of Emergencies, the Prosecutor General’s Office, the Investigative Committee, drug control authorities, institutions of the penitentiary system and others.

Recall that in 2022, until October 1, military pensions were already indexed twice. From January 1 – by 8.6 percent, from June 1, 2022, the amount of the additional payment increases to 19.5% of the assigned pension. These additional payments were made on behalf of the president. From October 1, 2022, 19.5% surcharges are canceled, but a 15.5% surcharge is introduced for participants in the Great Patriotic War and their families. In addition, the reduction factor used to calculate military pensions is increasing from 74 to 85.47. As a result, the total increase will remain at the same level – 19.5%.

comments Polina GusyatnikovaSenior Managing Partner at PG Partners:

“According to the law, the amount of pensions for military categories of pensioners is tied to the amount of their monetary allowance and is calculated using a coefficient set on January 1, 2012 in the amount of 54% and since then has been increasing annually by 2% per year until it reaches 100% (currently it is 74%). For the purpose of indexation, the legislator has established a special monthly supplement for these categories of pensioners in the amount of 8.6% of the assigned pension. From October 1, the additional payment will no longer be paid, but on the other hand, the coefficient for calculating the size of pensions depending on the monetary allowance will increase from 74% to 85.47%, and the monetary allowance itself will also increase (by 4%). Which together will compensate for the abolition of the surcharge, and as a result, the total increase in military pensions will remain at the same level – 19.5%.

Clarification of the conditions of bank deposits

The Central Bank of the Russian Federation required banks to indicate the minimum guaranteed deposit rate on the first page of the agreement, as well as on websites and at any point of sale. From October 1, banks will be required to disclose the terms of deposits in the form of a table. When choosing and opening a deposit – both in the office and online – the depositor will be able to get acquainted with its key conditions, summarized in a concise and understandable table. It will indicate the interest rate, conditions and period for calculating increased rates, the procedure for paying interest and extending the deposit, restrictions on replenishment and early withdrawal of money. This will help reduce the number of bank depositors who are misled by advertising promises.

comments Natalya MilchakovaPrincipal Analyst at Freedom Finance Global:

“Amendments to the law “On Banks and Banking Activities”, which gave the Bank of Russia the authority to introduce requirements for banks to inform the public about the conditions of deposits, have already entered into force in the summer. And now, from October 1, at the request of the regulator, banks will be required to disclose more detailed information about the interest rate and other material conditions of their offers on deposits and deposits, and make such disclosure in the form of a table. The tabular form allows even individuals who are not very financially literate to easily compare conditions for different deposits in different banks and make a more informed choice. And more experienced bank customers will be able to quickly find in the tables some little tricks of credit organizations that made the deposit less profitable for the depositor. For example, not all banks, inviting clients to their high interest rate on deposits, informed the future depositor in advance that such a rate does not exist for everyone, but only for “salary” clients. Depositors will undoubtedly be happy with this innovation, and those (mainly large) banks that have long informed their current and future customers about the terms of the deposit in the form of a table will not lose. But small banks that have not yet taken care of this may now have to slightly improve the software and hire additional specialists in the design and layout of advertising materials in order to comply with the requirements of the Central Bank and remain competitive.

Protection from financial scammers

From October 1, bank customers will be able to voluntarily restrict online transactions to protect against fraudsters. From this date, customers will be able to independently set a ban on online transactions in the bank where they are served or limit their parameters – the maximum amount for one transaction or a limit for a certain period of time. Moreover, it will be possible to establish a ban on remote channels both for individual services (for example, transfers, online lending), and for all operations. To use the free service, the client needs to write an application to his bank – the form of the document and the procedure for sending it are determined by the credit institution itself. At the same time, the client of the bank will be able to cancel the ban or change the parameters of online transactions at any time without restrictions.

In addition, for additional protection of customers from the actions of cyber fraudsters, from October 1, banks will also be required to identify all devices from which citizens make online transactions, confirm their phone numbers and email addresses.

Ivan Samoylenko, managing partner of B&C Agency, comments:

“To use this service, you should contact the bank branch where the card was issued to the consumer. You can limit the amount of the transfer, determine the recipients (where such transfers are made), etc. As a result, citizens will be protected from the situation when suddenly money from the card is transferred to new recipients or the amount is too high, unusual. You can also protect senior citizens from fraudsters: children can complete such applications with their elderly parents. After all, fraudsters often take advantage of the fact that older people do not always have the basics of financial literacy and transfer their personal banking data to criminals.”

The end of the moratorium on bankruptcy

In Russia, the moratorium on bankruptcy, which was in effect until October 1, will not be extended. In the spring of 2022, the Government of the Russian Federation introduced a moratorium on initiating bankruptcy cases on applications submitted by creditors in relation to legal entities, individual entrepreneurs and citizens. This was a measure to support business and the population against the backdrop of large-scale Western sanctions. The moratorium was valid for 6 months – from April 1 to October 1.

comments Pavel UtkinLeading Lawyer, OLC “Parthenon”:

“It was an ambiguous measure. First, the moratorium could simply be abandoned in order to carry out bankruptcy or pay dividends. So, by the way, almost all public Russian companies acted. Secondly, that individuals and legal entities could easily file for bankruptcy themselves, without waiting for the end of the moratorium, since it involves a temporary ban only on bankruptcy initiated by creditors, and not by the company or individual itself. In principle, this was a good measure of assistance to those who needed to rebuild their business from an import-export model, but the problem is that the moratorium does not eliminate the need to fulfill their obligations to lenders. So, in general, we can safely say that at the end of the year, the number of bankruptcies, both among individuals and among legal entities, will increase by at least 20–25% due to the current situation in the economy and geopolitics.”

Benefits for the poor will be transferred to the Mir card

The government has expanded the list of social benefits that will be transferred to the Mir card. Starting October 26, Mir will receive monthly payments and benefits to low-income citizens, as well as subsidies for housing and utility bills. Such subsidies are given if the cost of a “communal” exceeds 22 percent of the total family income. Teachers in rural areas, family members of fallen military personnel and employees of the Ministry of Internal Affairs can receive compensation for housing and communal services on the card. In addition, after the entry into force of the resolution, annual payments will be transferred to the Mir card to people awarded the Honorary Donor badge.

Natalia Milchakova, Lead Analyst at Freedom Finance Global, comments:

“The number of issued Mir cards in Russia, according to the National Payment Card System, by the end of the 1st half of 2022 exceeded 134 million. Now, if benefits to low-income citizens, as well as some types of subsidies, such as subsidies for housing, will be transferred only on the World map, it is logical to expect that there will be even more users. On the one hand, such growth is welcome. For recipients of state benefits and subsidies, the Mir card is an effective protection against sanctions from countries unfriendly to Russia. On the other hand, any monopolism has its own disadvantages and costs. The Mir cards have a significant drawback: the inability to pay with them abroad, except for the countries of the Eurasian Union and some countries of the near abroad. It is difficult to deal with this shortcoming in the current geopolitical conditions, but inside the country, Mir card holders are offered new interesting products. I would like NSPK to have even more such interesting client products available to Russians with different incomes.”

When selling a car, it will be possible not to terminate the OSAGO contract

On October 1, amendments to the OSAGO rules come into force, according to which it will be possible to sell or donate a car without terminating the insurance contract. At the same time, the owner of the OSAGO policy is obliged to notify the insurance company in writing if the owner of the car changes. According to the law, the owner of the car cannot be changed in the policy, so the new owner must conclude his own compulsory insurance contract. Another innovation concerns the obligation of the insurer to acquaint the victim in an accident with the results of the examination. The company must do this within five working days after receiving the results of the examination or inspecting the car.

In addition, insurance companies will be able to learn without the participation of the car owner about the change in the license plate of his car from an automated system. If the company receives information about the new number on its own, it must inform the owner about this, and he may ask to make changes to the OSAGO policy.

Ivan Samoylenko, managing partner of B&C Agency, comments:

“This innovation has its own peculiarity. Failure to notify the insurance company in time about the change of ownership of the car will entail administrative liability in the form of a fine. Therefore, along with the sale of the car, you should immediately notify the insurance company about this.