Moratorium: once again and for the third year

Иван Ермохин Иван Ермохин Expert of Center Russia-OECD published Russia and the OECD · Insurance and private pension funds

Last Friday, the Russian Parlament adopted in the third reading the law to freeze the accumulative part of pension in 2016. So, the moratorium on the formation of the accumulative part of pension will be extended for the third year.

Extending the moratorium does not come as a surprise to market participants. In October, ex-Finance Minister Alexei Kudrin predicted a freezing of the accumulative part of pension in 2016. In September, head of the Central Bank of Russia Elvira Nabiullina pointed out to the adverse effect of such extension:

«It will mean that for the sake of short-term solutions of problems, we are sacrificing the long-term goals...because the accumulative part of pension creates sustainability for all pension system».

For Russia, the budget freeze will help to save 342 billion rubles. It is not clear how the government will spend money. It is also not clear the future of private pension system in Russia. For now, governmental officials deny any changes in the pension system. Thanks to rumors and several statements of government officials we know that the Central Bank is preparing a reform of the pension system. Unfortunately, the details of such reform have not yet published.

On Wednesday, 2 December 2015, the Central Bank of the Russian Federation issued the report «The main directions of development and functioning of the financial market of the Russian Federation for the period 2016-2018». The report says:

«At the same time, there is a risk of extending the moratorium on the accumulative part of pension in 2017 and subsequent years. That will negatively affect the confidence in the private pension system and intervene the long-term development.»

We should notice that OECD warned Russia about the freezing of the accumulative part of pension - it will have an adverse impact on the level of public confidence in the pension system. In the history of OECD countries, there are no cases of freezing the accumulative part.