New pension system to combine people’s money, tax incentives

MOSCOW, Oct 29 (PRIME) -- Russia’s central bank and the Finance Ministry on Tuesday presented a new system of voluntary pension savings – a guaranteed pension plan that will provide people with the possibility to finance their private pension independently with government tax support.

“We want to give people a chance to have a product that will allow them to save for retirement in such a way that it is profitable on the one hand, guaranteed on the other hand, and on the third hand that the infrastructure is organized in such a way that there are no disputes between people and the pension funds, and so that there is always an answer to the question who is right in these disputes and who is to blame,” Deputy Finance Minister Alexei Moiseyev said at the presentation.

Under the guaranteed pension plan, people’s pension contributions of no more than 6% of the salary will be exempt from the personal income tax. There will also be a stimulating incentive in the form of an increasing coefficient when calculating the income tax for the employer in case it co-finances its workers’ contributions plus a social deduction if a person pays more than 6% of the wage.

The guaranteed pension plan will be an absolutely voluntary system. A contract for the plan will be considered signed from the first payment. A person will be able to determine the amount of contribution independently without restrictions, but only 6% of the salary will be exempt from the personal income tax. A person will be able to change the amount of contribution as he wants and suspend payment of pension contributions an unlimited number of times for no more than five years.

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