New pension reform will cost 10 billion

The tax benefits to be granted under the new pension reform will cost the government RUR 10 bln ($156 mio); experts believe the money will increase people’s purchasing power and stimulate demand.

The new pension reform initiators hope to annually attract RUR 175-360 bln ($3-5.5 bln) into the pension system, Izvestia writes. However, experts seem skeptical about the inflow to the Guaranteed Pension Capital system, which will be created as part of the second pension reform. After the Russian government raised the retirement age, citizens have become disillusioned about the entire system and are unlikely to actively contribute to its work.

According to the reform plan, those Russians who agree to pay 6% of their incomes as part of a “second pension” plan will be entitled to a 13% tax deduction. Pensions and early benefits will be also exempt from personal income tax. According to officials, contributors will benefit from the Guaranteed Pension Plan system when they are older; however, they cannot yet say how big their additional incomes will be.

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