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MinLabour considers new pension formula

 
04.03.2013

MinLabour has prepared a new pension formula and delivered it to Deputy Prime Minister Olga Golodets, according to Vedomosti. The key highlights are as follows.

1) Hike in salary threshold for lower social tax from 1.6x the average wage currently to 2.3x the average wage. If this rule had been introduced at the start of 2013, the salary threshold would not have been RUB 568,000, but RUB 816,500.

2) Introduction of minimum wage base for social tax calculation at double official minimum wage bill.

3) Special units to calculate pensions (1 unit for a contribution to pay-as-you-go part at 22% (in the case where 0% is routed to the funded part); 0.7 unit — at 16% (in the case where 6% is routed to the funded part)). RUB equivalent of units is set on an annual basis depending on the balance sheet of the State Pension Fund.

4) Gradual increase of minimum working experience from the current 5 years to 15 years.

5) More stimulus for working after pension age: the more working years after the pension age, the higher the pension (not the more working experience, the higher pension).

The discussion on pension system reform continues and we shall be looking for more heavy debates in March (as it is set as a deadline for a new pension formula to be delivered to the government). The government is looking for ways to curb the transfer to the State Pension Fund.

Mykyta Mykhaylychenko, Dmitri Fedotkin, Maxim Oreshkin, Daria Isakova
VTB Capital analyst

Tags:
pension, ruble

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