Schneider S. M., Petrova T., Becker U. (eds.), Pension Maps: Visualising the Institutional Structure of Old Age Security in Europe and Beyond, 2nd ed., Munich: MPISOC, 2021.
The Russian Old Age Security System in 2020
The first attempts at setting up old age insurance in Russia date back to the beginning of the 20th century, when the Russian Empire still existed. In the USSR, a state social insurance existed only formally since social security expenses were part of the USSR state budget. Contributions were paid by enterprises for their employees without individual assignment and were thus similar to taxes. The Russian pension system of today developed after the downfall of the USSR. As a result of the pension reform of 2002, the public pension system was divided into the system of tax-funded ‘state pension’ provision financed by the state budget on the one side, and contribution-based ‘labour pensions’ on the other. The reform of 2002 also introduced a capital-funded part to labour pensions. In 2015, the old age ‘labour pension’ was transformed into the old age insurance pension and the funded part of the labour pension was transformed into the funded pension. Currently, a ‘standard level of protection’ is achieved by mandatory insurance in public insurance-based pension schemes or tax-funded state pensions for specific population/occupational groups. The funded pension scheme, which had originally been introduced as part of the mandatory pension insurance system and as part of standard protection, has been suspended until 2023, but is accessible on a voluntary basis for persons who wish to ‘top up’ their pension level (income). It is also possible to ‘top up’ public old age pension benefits through voluntary participation in capital-funded occupational and private pension schemes. The pension system provides a ‘minimum’ protection through a last-resort social pension for elderly persons who do not qualify for an old age insurance pension. Outside of the pension system, social assistance measures address different population groups with insufficient income, but also target pensioners whose pension falls below the amount of the pensioners’ minimum subsistence level.
Standard Protection in Old Age
The statutory old age insurance pension scheme (страховая пенсия по старости) covers a large part of the economically active population in the country. Salaried employed persons in the private and public sector as well as the majority of self-employed persons are mandatorily enrolled in this scheme. Further, persons not compulsorily insured, persons working abroad, self-employed persons who fall under the special tax regime of ‘tax on professional income’ (налог на профессиональный доход) and some other categories of persons can be voluntarily insured in this pension plan. Insurance contributions for employees are entirely paid by the employer. Employees who work under harmful and dangerous conditions are entitled to an insurance pension at an earlier age; for this category, employers have been obliged to pay additional (higher) insurance contributions since 2013.
Specific population groups are protected through ‘state pensions’ financed out of the general budget: Servicemen are protected by the tax-financed long service pension scheme for members of the armed forces (пенсия за выслугу лет военнослужащим). Individuals suffering from diseases caused by radiation or other man-made accidents are provided old age benefits from the tax-financed scheme of old age pension for victims of nuclear and other technogenic disasters (пенсия по старости гражданам, пострадавшим в результате радиационных или техногенных катастроф). Once these persons fulfil the qualifying conditions for the old age insurance pension, they can decide whether to opt out of this tax-financed pension in favour of the old age insurance pension. Federal civil servants are entitled to the long service pension scheme for federal state civil servants (пенсия за выслугу лет федеральным государственным гражданским служащим), which is paid as a supplement to the statutory old age insurance pension.
As of today, all persons mandatorily or voluntarily insured in the mandatory pension insurance scheme can also participate voluntarily in the funded pension scheme(накопительная пенсия), which is managed by private pension funds or the Pension Fund of the Russian Federation through management companies. Benefits gathered on a voluntary basis can be regarded de facto as a top-up. However, this scheme was originally introduced as part of the mandatory pension insurance system and as part of standard protection. Persons born after 1967 had the possibility to opt into the scheme and to allocate parts of the mandatory pension contributions (6% out of 22%) to personal pension saving accounts. Since 2014, this possibility has been suspended (and presumably will be until 2023), with the result that the entire amount of mandatory pension contributions is (re)directed to the financing of the pension insurance scheme.
Since 1992, it has been possible for insured persons to top up their pension income voluntarily in the non-state (private) pension schemes (негосударственное пенсионное обеспечение) and in the corporate (occupational) pension schemes (корпоративные пенсии). In the case of private pension schemes, persons can create their own individual pension saving account based on a pension contract. Payers of additional (voluntary) contributions to the private pension schemes are entitled to a social tax deduction on income tax on natural persons. In addition to the statutory pension insurance, which provides special entitlements to workers in hazardous jobs, employers can decide whether to enrol their employees in the private and fully funded supplementary early private pension scheme for employees working under harmful and dangerous conditions (досрочное негосударственное пенсионное обеспечение работников, занятых во вредных и (или) опасных условиях труда).
Elderly persons who do not qualify for the old age insurance pension are entitled to a social pension for old age (социальная пенсия по старости). This pension scheme is not means-tested. The social supplement to the minimum subsistence level of a pensioner (социальная доплата к пенсии до уровня прожиточного минимума пенсионера), in the form of a special means-tested social assistance supplement, targets pensioners with a low pension income. In addition, pensioners can apply for general social assistance benefits such as cash benefits, subsidies, and social services (e.g. sanatorium treatment vouchers).