Russia to Implement new Pension Payment Procedure

Russia to Implement new Pension Payment Procedure

Photo: https://mayaksbor.ru/

The Ministry of Labor has developed a new procedure for the payment of pensions from July 1, 2022 for those citizens who have the right to receive their pension savings in a lump sum. The payable amount is a total of monthly retirement benefits for 5 years.

According to Lenta.ru, this novelty will affect only two categories of Russian pensioners: citizens who were granted a survivor's or disability pension and those who do not have a sufficient length of service for various reasons to be eligible for an old-age pension. The latter do not have enough pension points. This includes men who are over 60 and women who are 55 or older.

The new procedure will be introduced from July 1, 2022. To receive money, a citizen logs in to the Gosuslugi portal to send an application which the Pension Fund has to consider within 5 days according to the law. The decision, positive or negative, will also be published on this portal. At the same time, the terms for repeated receipt of this lump-sum payment will also change. It will be possible to reapply to the Pension Fund in 5 years.

Pension Fund to provide services by appointment

The Pension Fund will provide services by phone, e-mail, or appointment starting next year. This temporary procedure for providing various services has been registered with the Ministry of Justice. Pensions, as well as various social payments, will be calculated for the Russians based on the data available to the Pension Fund. A citizen will be informed of the adoption of this or that decision, and if necessary, he or she will be invited to a state institution to provide additional documents.

Who is eligible for the indexation of pensions

On December 1, 2021, three categories of Russian pensioners had their pensions indexed. Who will get an increased pension? First of all, the elderly Russians who turned 80 in November. Their fixed retirement pension payment has doubled and amounts to 12,088.96 rubles ($164.24.)

Pensioners who had quit their jobs before September 1, 2021, are also entitled to a supplement. These pensioners have automatically been given a 3-month increment. A citizen who has applied for pension recalculation can be eligible for automatic pension increase.

What do Russians think about their pensions?

Getting a retirement benefit is a source of concern for every person. This is understandable as everyone wants to have an income in retirement. Earlier, a vast majority of citizens needed a sufficient service record to live on a pension, whereas now, with high unemployment, getting a pension is a problem, especially in small towns and rural area. In addition, there is a rapid growth of prices for food, goods, and services. Therefore, it becomes clear that the current pension is not enough for comfortable living at all.

In a recent poll, respondents said that 43,000 rubles ($584.24) would be a decent pension nowadays, wrote Lenta.ru. Since most Russians simply do not receive such a pension, 22% of pensioners are ready to moonlight, while as many as 61%, intend to continue working after retirement. At the same time, almost a quarter of respondents still count on their pensions, and 14% plan to live on their savings.

How can one save for retirement?

The question is how one can save for comfortable old age? Let's see what experts advise. According to Lenta.ru, Olga Daineko, an expert at the Center for Financial Literacy at the Ministry of Finance, named four ways to save.

The first way is buying a property, for example, a small studio apartment that can be rented out. However, we must admit that this will suit a small part of Russians with “spare millions of rubles.”

The second option is to open a bank deposit, said Daineko. It is safe to keep no more than 1.4 million rubles ($19,021.8) on one bank account. This is the amount that will be compensated at the occurrence of an insured accident. Again, this way is not suitable for everyone.

The third option is an individual investment account (IIA), with which one can receive a 13% annual tax deduction from the amount deposited on this account. The level of yield depends on what exactly will be deposited into the IIM: government bonds, stocks of companies, mutual fund units. One needs a very good understanding of economics to be able to choose the best investment option.

The last method is, perhaps, the most acceptable to most Russians. It is the accumulation of funds for retirement in one of the non-state pension funds (NPF). When choosing this method, one has to carefully study the fund's term of operation, its profitability in recent years, and the number of insured persons and take into account the total amount of the fund's funds.

In addition, there are quite a few Russians who are entitled to early retirement. For example, people who suffered from man-made disasters, as well as servicemen, federal level officials, test pilots, employees of the Federal Guard Service and the Ministry of Internal Affairs and cosmonauts. Doctors and teachers with a specialized service record of least 25 years can also retire early.

So, today's young people who are just starting their career should already think about how they will live in retirement and do something.

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