The Pension Fund of the Russian Federation (PFR) (russian: Пенсионный фонд Российской Федерации (ПФР)) is the principal national
pension fund in Russia. It is the largest organization of Russia to provide socially important public services to
Russian citizens
Russian citizenship law details the conditions by which a person holds citizenship of Russia. The primary law governing citizenship requirements is the federal law "On Citizenship of the Russian Federation", which came into force on 1 July 2002.
...
. Founded December 22, 1990 decision of the
Supreme Soviet of the RSFSR
The Supreme Soviet of the Russian SFSR (russian: Верховный Совет РСФСР, ''Verkhovny Sovet RSFSR''), later Supreme Soviet of the Russian Federation (russian: Верховный Совет Российской Федерации, ...
No. 442-1 "On the organization of the Pension Fund of the Russian Federation". The fund has branches across all
Federal Subjects of Russia
The federal subjects of Russia, also referred to as the subjects of the Russian Federation (russian: субъекты Российской Федерации, subyekty Rossiyskoy Federatsii) or simply as the subjects of the federation (russian ...
.
The
State Duma
The State Duma (russian: Госуда́рственная ду́ма, r=Gosudárstvennaja dúma), commonly abbreviated in Russian as Gosduma ( rus, Госду́ма), is the lower house of the Federal Assembly of Russia, while the upper house ...
decided (July 5, 2022) to fuse this fund with the
Social Insurance Fund of the Russian Federation and to create a united social fund under the title
Pension and Social Insurance Fund of the Russian Federation
A pension (, from Latin ''pensiō'', "payment") is a fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments ...
since January 1, 2023.
History
The Russian Pension Fund experienced three major changes from the
Soviet system
The political system of the Soviet Union took place in a federal single-party soviet socialist republic framework which was characterized by the superior role of the Communist Party of the Soviet Union (CPSU), the only party permitted by the C ...
to the modern one throughout the 1990s and early 2000s. The first being a switch from the pension entirely controlled by the Soviet budget. This initial switch created the pension fund separate from the
state budget in 1990.
While supported by the
Russian government
The Government of Russia exercises executive power in the Russian Federation. The members of the government are the prime minister, the deputy prime ministers, and the federal ministers. It has its legal basis in the Constitution of the Russia ...
as a switch from the almost
collapsed USSR, the system had very few holds against its authority. Throughout the 1990s, allegations of
abuse of power
Abuse is the improper usage or treatment of a thing, often to unfairly or improperly gain benefit. Abuse can come in many forms, such as: physical or verbal maltreatment, injury, assault, violation, rape, unjust practices, crimes, or other t ...
and racketeering were held against the fund, with the
State Duma
The State Duma (russian: Госуда́рственная ду́ма, r=Gosudárstvennaja dúma), commonly abbreviated in Russian as Gosduma ( rus, Госду́ма), is the lower house of the Federal Assembly of Russia, while the upper house ...
often refusing to address the broad institutional issues with the fund. The primary issues being viewed as the lack of centralization, and the lack of structured guidelines for how pensions were to be paid out.
As the 1998
Russian financial crisis began the fund began to be hit by budgetary shortfalls. Following the resignation of
President
President most commonly refers to:
*President (corporate title)
*President (education), a leader of a college or university
*President (government title)
President may also refer to:
Automobiles
* Nissan President, a 1966–2010 Japanese ful ...
Boris Yeltsin
Boris Nikolayevich Yeltsin ( rus, Борис Николаевич Ельцин, p=bɐˈrʲis nʲɪkɐˈla(j)ɪvʲɪtɕ ˈjelʲtsɨn, a=Ru-Boris Nikolayevich Yeltsin.ogg; 1 February 1931 – 23 April 2007) was a Soviet and Russian politician wh ...
, changes began to be viewed as necessary and a new system was fully approved in 2001. This system included a set pension for elderly and disabled, a set savings account based on what is actually paid into the system, and a pay as you go contribution fund.
Due in part to low retirement ages in Russia, official retirement set at 55 for women 60 for men, multiple organizations called for a reform once more of a pension system deemed unsound. These calls would couple with the
Russian financial crisis of 2008, leading to another round of reforms in 2010. These reforms would combine the set pension for elderly and disabled with the pay-as-you-go system, simplifying the overall fund.
As Russia's working population stabilized after years of decline, the fund too could begin to stabilize. From 2019, a gradual hike of the retirement ages was started (the new level of 60/65 for women/men should be attained in 2028).
Functions
Among the socially significant functions of the Pension Fund of Russia:
*Appointment and payment of pensions (for 40 million pensioners);
*Accounting insurance funds received for mandatory pension insurance;
*The purpose and implementation of social payments to certain categories of citizens: veterans, the disabled, people with disabilities due to war injuries, Heroes of the Soviet Union, Heroes of the Russian Federation, etc.;
*The personified accounting of participants of the system of a mandatory pension of insurance;
*The interaction of with policy-holders (by employers - the payers of insurance of pension contributions), the penalty of back taxes;
*The issuance of certificates for a parent capital;
*The payment of the maternity capital;
*Management of the funds of the pension system;
*Implementation of the program of state co-financing of voluntary pension savings (56-FZ of 30.04.2008, it is also the program "thousands upon thousands");
*Since 2010 - the administration of insurance funds received for mandatory pension insurance and the
Federal Compulsory Health Insurance;
*Since 2010 - the establishment of a federal social payments to social pensions, in order to bring the total income of the pensioner to the subsistence minimum for pensioners
Payment system and funding
The Pension Fund of the Russian Federation is funded by a mix of state and private employers, through cash transfers into the overall fund from the
Russian Central Bank
The Central Bank of the Russian Federation (CBR; ), doing business as the Bank of Russia (russian: Банк России}), is the central bank of the Russian Federation. The bank was established on July 13, 1990. The predecessor of the bank can ...
, and
payments by individual citizens. The individual payments are placed in individual accounts which are then reinvested into the market either by the choice of the
citizen, or if no choice is specified, the government itself.
This system had numerous issues throughout the 2000s, as a low retirement age along with inability to properly invest funds, led to deficits in the pension budget. Under President Vladimir Putin's
first
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Arts and media Music
* 1$T, American rapper, singer-songwriter, DJ, and rec ...
and
second
The second (symbol: s) is the unit of time in the International System of Units (SI), historically defined as of a day – this factor derived from the division of the day first into 24 hours, then to 60 minutes and finally to 60 seconds ...
term in office, maintenance of the pensions and regular payouts became a priority. This push led to multiple programs designed to encourage private savings for citizens, and for employer based pensions separate from the government's budget.
With efforts by the Russian government, basic pensions became near universal for Russian citizens. Heavy transfers from the Russian budget to the Russian Pension Fund, along with steady payroll contributions from the newer working class stabilized much of the pension's throughout the 2000s, until further reforms were needed to address demographics issues.
The payment system of the Russian Pension Fund however, is viewed as instable in the long run at the given standard, with a raise in the retirement age being cited as the easiest and most prevalent issue to solve.
Pushes towards privatization in the 1990s, along with the encouragement of private accounts, became the government strategy in handling the pension system. However, the newer Russian economy was still heavily dependent on state involvement, and private involvement remains inefficient at curtailing budgetary crises.
Despite the burden the low retirement age causes, reformation of the pension system and raising of the age remains inherently controversial in Russia. Fear of losing pensions, or of longer careers than intended, fuel popular resentment of politicians aiming to change the system. As pension reform and saving the pension remains controversial, it is unlikely that dramatic change would occur out of fear of upsetting the voting base.
Russia's pension system is paid either through employers, who take 22% of the payroll to accommodate for costs of pensions, by individuals themselves, who pay around 14,000
Ruble
The ruble (American English) or rouble (Commonwealth English) (; rus, рубль, p=rublʲ) is the currency unit of Belarus and Russia. Historically, it was the currency of the Russian Empire and of the Soviet Union.
, currencies named ''rub ...
s (218
USD
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
) per month towards pensions on a maximum of 512,000 rubles (US$7,974) per year, or by
regional governments
In geography, regions, otherwise referred to as zones, lands or territories, are areas that are broadly divided by physical characteristics (physical geography), human impact characteristics (human geography), and the interaction of humanity and ...
who directly pay into the pension funds of their areas. Benefits and rate of pensions adjust overtime with inflation and the average wage. Due to the decrease in population for several years, and estimates of slow population growth, fears over the Pension Fund's ability to finance the pensions remain prominent in political discussion. Pensions remain the largest single budgetary obligation of the Russian Federation, which will most likely put increasing strains on future Russian development due to population woes.
References
External links
Official website
Official website
{{Economy of Russia
Economy of Russia
Social security in Russia
Pension funds