Russian State Duma Finance Committee Turns Against Putin

Over the decision of the head of the Kremlin to freeze the pension savings of Russians.

The Russian authorities should not have frozen the pension savings of Russians in 2014, it was a wrong decision, said the head of the State Duma Committee on Financial Market Anatoly Aksakov.

"I believe that we did not just rushed too much then, but made a mistake," he said at the Bank of Russia's financial congress (quoted by TASS).

The deputy reminded that at that time Russia had non-state pension funds (NPFs), which had collected large sums and expected to work with the received funds, but the authorities suddenly changed the "rules of the game."

Aksakov urged to consider the possibility of returning to the previous rules that were in force before 2014, but admitted that the issue is debatable. According to him, the Finance Ministry will definitely oppose such a move. "There are different views there and, after all, the attitude of the ministry that is leading this topic. It is still, as far as I understand, negative. This work should be carried out," he summarised.

Until 2014, employers paid monthly insurance contributions to the Russian Pension Fund (PFR, now the Social Fund) in the amount of 22% of employees' salaries. 6 per cent went to the funded part of the pension, and 16 per cent to the insurance part, for paying current pensioners. In the first case, the money was accumulated in special accounts. These funds, as well as income from their investments, were intended for the account holder. It was assumed that he would receive them after retirement. And people themselves decided who would manage the accumulated money - PFR or NPF.

However, after annexing Crimea in 2014 and the sanctions that followed, these funds were frozen. Since then, all 22% of contributions have been allocated to finance the insurance pension. As a result, for the last ten years, the funded pension in the country has been formed only by investing the money previously received by the funds.

The head of the Ministry of Finance of the Russian Federation Anton Siluanov said that the frozen savings of Russians "went to Crimea and the taking of anti-crisis measures". At the same time, the decision was officially explained by the need to reform the NPF.

Initially, it was assumed that the moratorium would be temporary and would last only a year, but in the end it has been maintained until now. President Vladimir Putin extended it until the end of 2025. The total amount of pension savings in the accounts of Russian non-state pension funds at the beginning of this year was 3.3 trillion rubles.

The RF Ministry of Finance stated that the introduction of funded pensions changed the behavioural model of Russians, who stopped relying on the state to provide for their old age. At the same time, the ministry admitted that the profitability of NPFs was insufficient due to "difficult economic conditions" at the time of creating the funded pension insurance system in 2002.

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