Do you qualify for a Russian pension? This guide explains the pension in Russia, Russian pension funds, the Russian pension system, the average pension in Russia and how to apply to the Pension Fund of the Russian Federation.
If you work in Russia or retire as a foreigner, it’s important be aware of any Russian pension benefits for which you might qualify. Typically, workers in Russia who pay into the Russia pension fund via social security contributions can be eligible after eight years, although conditions apply.
The Pension Fund of the Russian Federation (PFR) reportedly pays several types of pension in Russia and social benefits to more than 42.7 million people and 270,000 Russian citizens living in around 120 other countries. The PFR has nearly 2,500 regional offices in all regions of the country. The main types of pension in Russia include:
- Insurance pension or welfare benefits (old age, disability and survivors pensions)
- State pension (long service, old age, disability and survivors pensions)
- Social pension
- Funded pension
After you relocate to Russia, residents are obligated to pay into the Social Insurance Fund (FSS) and medical insurance fund, in exchange of social benefits and free health care and hospital services. For information on healthcare, see Expatica’s guide to the Russian healthcare system.
Who qualifies for a Russian pension?
Contributions towards the Russian pension system are mandatory regardless of nationality. If you are on a temporary visa and your stay in Russia exceeds six months, you will also have to pay social security contributions. The only exemption are workers on a highly-skilled work visa. Read more information in Expatica’s guides to Russian visas and work permits in Russia.
The Russian retirement age to draw a pension is 60 for men and 55 for women, which is earlier than European standards. However, the retirement age in Russia could be subject to change in 2018 as part of another Russia pension reform.
Before you are entitled to claim a Russian pension from the Pension Fund of Russian Federation, you must have been making contributions for at least eight years. The only exemption to this rule is if Russia has a social security agreement with your home country.
Participation in second pillar occupational pension is also compulsory, but only for workers born after 1 January 1967.
In limited circumstances, early retirement is possible for workers in several industries and professions, specifically occupations with typically short working lives or hazard risk. In such circumstances, a Russian pension is calculated using a system called ‘bridging pensions’.
Average pension in Russia
The Pension Fund of the Russian Federation announced significant changes in 2017 to the state Russian pension and Russia pension amount, most notably from indexing social benefits according to inflation.
From 1 February 2017, the pension in Russia was indexed at the actual rate of inflation growth (around 5.4 percent), which resulted in an average pension in Russia of some RUB 13,620 (EUR 225) for the state old-age scheme.
The state Russian pension and social pensions were again indexed according the growth of living wages (around 2 percent) on 1 April 2017. The indexation puts the average pension in Russian at around RUB 13,655 (EUR 200) in 2017. The social pension for the disabled, inluding children, also rose in 2017, to RUB 13,349. Insurance pensions are also set to be indexed on August 2017 for pensioners who were employed in 2016.
Although the Russian pension isn’t high, many pensioners are eligible for additional benefits, such as free public transport or medicine discounts.
The Russian pension system: Three pillars
Following the 2012 Russian pension reform, the Russian pension system has a three-pillar structure consisting of:
- a mandatory pay-as-you-go (PAYE) state pension
- company pension funds – funded by mandatory social security contributions paid by employees
- voluntary private pension funds.
Pension fund of the Russian Federations
The basic state pension in Russia is compulsory, but yields a low return. All employees are entitled to a state old-age pension after eight years of paying social security. Contributions are paid directly from your earnings, along with other social taxes, into the national Russian pension fund at the following rates:
- 22 percent for earnings under RUB 624,000 (and 10 percent for any further amounts)
- 5.1 percent into mandatory federal and territorial medical insurance funds
- 2.9 percent into the social insurance fund.
People born prior to 1 January 1967 contribute 14 percent of their state Russian pension into a uniform social security tax and insurance. They do not pay into the accumulative part.
People born on or after 1 January 1967, however, contribute 7 percent to social security and 7 percent to the mandatory second pillar insurance. This is an accumulative part that is managed by asset managers that invest the fund. You have the option to select your own asset management company, otherwise it is appointed to a state-owned bank.
Under the existing legislation, basic retirement pensions include a pay-as-you-go system and consist of an insurance fund and a voluntary cumulative component. The benefit of voluntary contributions is that the Russian pension amounts are paid as life-long payments and are not taxed.
Compulsory company pensions in Russia
Employees and self-employed professionals are obligated to pay into an occupational pension and pay insurance contributions. The rate of pay is 22 percent of your gross salary.
Workers have the right to choose whether their contributions are paid into the Pension Fund of the Russian Federation (PFR) or the non-state pension fund (NFR).
Contributions to the Pension Fund of Russian Federation come with a variety of investment options, otherwise payments go to the state’s default asset manager Vnesheconombank.
If you intend to contribute to a private asset management company, make sure they have the appropriate licence and comply with legal requirements set by the PFR.
Employers are obliged to handle the management of insurance contributions and transfer the funds to appropriate accounts. The Russian pension system stipulates that insurance contributions should be transferred no later than the 15th day of the following month, otherwise they are subject to a penalty of 20 percent of the unpaid contributions.
Voluntary pension in Russia
In addition to compulsory pensions, earners have the option to pay into voluntary Russian pensions, either via an occupational pension or a private Russian pension fund.
Private pensions in Russia are controlled by large corporations or insurance companies. There are no limits as to how much you can pay into private pension funds, nor do companies always provide capital guarantee or ensure a minimum rate of return. Pension benefits are subject to personal income tax.
If you opt to pay into an occupational voluntary pension in Russia, your employer can arrange to make contributions on your behalf directly to the NFR. However, employers are not obligated to contribute to private occupational pensions.
Potential plans to scrap the mandatory pension system in Russia are expected to encourage people to invest in private pensions. Therefore, voluntary pension funds may be subject to change in 2017.
Survivors pension in Russia
There are several survivor pensions covered by the state Russian pension fund:
- survivor labour pension
- state survivor pension
- social survivor
Survivor labour pension
If a spouse was still in employment when they passed, the survivor is entitled to a Russian pension if they are a:
- Disabled widow
- Widow aged 55 or older
- Widow aged 60 or over
- An unemployed spouse caring for children under 14 years old or disabled.
If there is no surviving spouse, other benefactors include:
- Parents older than 60 years if no spouse
- Children up to 18 (or 23 if in further education)
- Brothers and sisters up to 18 years of age
- Grandfathers over 60 and grandmothers over 55.
Labour pensions are paid in two parts: a flat rate minimum and a Russian pension amount calculated based on capital in a pension fund, stipulated life expectancy after retirement, contribution period of survivor and number of dependants.
State survivor Russian pension
State pensions are paid to survivors irrespective of the deceased length of insurance cover or military service. Beneficiaries are the same as the above list.
Social survivor Russian pension
The social survivor pension in Russia is only paid when the deceased is not eligible for contributory pension.
For more information on the types of pensions available in Russia visit the Pension Fund of the Russian Federation’s website.
Taxes on pensions in Russia
The rate of taxation for foreigners depends on the individual’s tax residency status. Offical residents in Russia are charged tax on their Russian pension at a rate of 13 percent while non-residents are taxed at 30 percent. However, some private superannuation schemes are subject to tax efficient terms and Russia has agreements with some countries to avoid double taxation. To determine your tax status, read Expatica’s guide on taxes in Russia.
If you have a private pension in your home country, check with the policy holder to investigate how tax in Russia impacts on your pensionable income. It is also advisable to seek professional advice.
How to apply for your Russian pension
Pensions in Russia cannot be claimed until you reach the official Russian retirement age, unless you fall in the category of exempted occupations and job industries. To recoup your state Russian pension amount and company pensions, applications should be sent to the PFR on the address below (unless you opted to pay into a NFP investment). To receive payments from a private Russian pension fund, contributions should be made to the asset management company you chose.
PFR International Cooperation Department
4 Donskaya Street