Prime Minister Vladimir Putin conducts a working meeting with Pension Fund Chairman Anton Drozdov
9 april 2012
Transcript of the beginning of the meeting:
Vladimir Putin: Mr Drozdov, demographics have changed in Russia, with life expectancy now up to over 70 years. The number of pensioners in Russia this year is the largest it has ever been, at over 40 million people. This means that we need to continue improving the pension system while honouring all our social obligations to this group of people. Pensions and social benefits went up again on April 1. We are also encouraging the development of defined contribution pension plans. I would like you to report on the procedure for the payment of the increased part of pensions and social benefits and also on your work to improve the defined contribution plans.
Anton Drozdov: Mr Putin, the Pension Fund promptly implemented the government decision to index pensions and social benefits taken in late March. We reviewed the pensions for 40 million pensioners and 17 million social benefits recipients. As a result, pensioners and social benefit recipients received increased payments in April. The retirement pension is now over 9,000 roubles, to be precise almost 9,500 roubles, and social benefits have reached nearly 6,000 roubles. All these payments will be made until the end of this year.
We will also be reviewing pensions for 12 million working pensioners from August 1 and from July 1 we will pay out defined contribution pensions in accordance with the new law. About 4 million Russians will be entitled to defined contribution pensions. Those who have transferred their money to non-government pension funds should notify those funds in writing, while those who stayed in the Pension Fund of Russia should submit a written request after July 1. They will receive their money shortly afterwards. If the defined contribution pension is less than 5% of the overall pension, the money will be paid in one lump sum.
On the whole, I would like to say that based on the three-year budget we will increase pensions by another 30% and social benefits by nearly 40% by 2014. The average retirement pension will rise to 12,000 roubles and social benefits to 7,200 roubles. I would like to add that the requisite funds have been earmarked in the budget, which has been balanced; and we are collecting insurance contributions in full.
On the subject of insurance contributions, we collected nearly 3% more in 2011 and, according to tentative calculations, have collected nearly 5% more than the target figure in the first quarter of 2012 and 7% more than in the same period of last year. Therefore, we are confident that we will fulfil the plan this year and pensions will be paid out in full and on time.
In March we also completed the transfer of people’s pension savings to organisations of their choice – non-government pension funds. The current trend is a 4% increase in the number of people willing to entrust their savings to non-government pension funds. This is evidence of people’s growing trust in the market and belief that the economy will develop positively and sustainably. This is a very good sign.
At the same time, it should be said that last year some pensioners’ savings were transferred from the Pension Fund to non-government funds without their consent. We responded very firmly, terminating contracts with a number of transfer agents. We have drafted legislative decisions to increase [these agents’] responsibility and also to allow a more rapid return of the unlawfully transferred funds to their owners.
Vladimir Putin: Without prior arrangement?
Anton Drozdov: Yes, without prior arrangement. As for other issues, I would like to say that one of our priorities is working more effectively with people and insurers, primarily with people whose relations with the Pension Fund should become easier. The number of visits to Pension Fund offices fell by 4 million last year, to 22 million from 26 million visits, mostly because we introduced a system under which recipients do not have to file requests for calculating pensions for working pensioners and choosing from among several packages of social benefits.
We are also working hard to explain the system to people and are making more extensive use of computer interaction with other agencies. In particular, all services of the Pension Fund that require cooperation with other agencies are to be computerised by July 1 so that people will not need to collect more documents in addition to those they usually keep at home. At present they need to collect 38 such documents. Besides, those who file requests for housing subsidies in regional public service centres are usually told to provide reference materials from the Pension Fund. In this case we will send these materials to the regional centres electronically so that people will not need to go to the Pension Fund for them. This programme will be launched in Moscow on April 15. We hope that the number of visits to the Pension Fund will decrease. We are also developing client offices for the Fund’s visitors, including people with disabilities; we already have 2,400 such offices across Russia. As for insurers, a computerised system for services should reduce their costs for interacting with the Pension Fund.
We have cancelled financial reporting for 2011 for 3.4 million insurers who pay insurance contributions once a year, such as self-employed businessmen, lawyers, notaries and other self-employed people. We are calculating their contributions ourselves because we have all the data on their payments, and if we see any discrepancies we will forward our complaints to them.
Furthermore, we have been trying to reduce the efforts spent on financial statements by merging two types of reports: individual (personalised) record keeping and fund management. Next year we hope to simplify our relations with insurers. We are also actively contributing to the drafting of proposals on improving defined contribution pension plans and pension reforms as a whole.
Accumulated defined contribution pensions have already reached 1.8 trillion roubles. Now we must decide how to use this money. We need to invest this money more efficiently because we are talking about huge sums. We expanded the portfolio of the state asset management company in 2009, and we have now formulated proposals on how to further improve this work because these funds constitute a large share of the market and should be used for the development of the domestic economy.
Vladimir Putin: We must also ensure these funds are kept safe.
Anton Drozdov: Yes, we are doing so. Regarding safety, I would like to say that we have introduced a deferred provision in the law on accumulated defined contribution pension plans and are drafting proposals to improve guarantees for those who have such plans. It is a three-tier system in which the government will be involved to guarantee the safety of people’s pension accruals. This is an international practice, which we also want to employ.
I also want to say that the Pension Fund is working quite systemically. We are trying to improve our operations and make them more efficient, so that there will be no delays in the payment of pensions. We are also using our databases of actuarial models and of individual (personalised) records to help the ministry to calculate all trends and all consequences of the decisions proposed by the ministry experts.
The main objective is to expand the possibilities for the middle class to increase their pensions and, of course, to help those citizens on lower incomes.
Vladimir Putin: Thank you.