Increasing accumulation of retirement funds
Here's the revised article with a fresh, informal, and approachable tone:
Let's Talk Long-Term Savings in Russia: What's Up and What's Next?
As of June 19, over 5 million Russians have jumped on the long-term savings (LTS) program wagon, and the cash piled up in these accounts stands at a whopping 365 billion rubles! That's right, you read it correctly.
At the St. Petersburg International Economic Forum, Deputy Minister of Finance of the Russian Federation Ivan Chebeskov dropped this bomb. The LTS program, launched at the beginning of 2024, allows individuals aged 18 and above to get in on the action, offering a choice between lifelong payments or a minimum commitment of ten years. And guess what? You can even transfer your previous pension savings from the mandatory insurance system to LTS!
Now, who are the big players in this LTS game? As of May 31, it's Sberbank's NPP with 3.36 million participants and a staggering 240 billion rubles in investments. Coming in second is VTB Pension Fund with over 916,000 individuals playing the game. More than 200,000 contracts were signed up by citizens in Gazfond's NPP, while several funds have secured tens of thousands of participants each.
So, what's the buzz all about? Experts like Arkady Nedbay, chairman of the National Association of Pension Funds, predict that the number of LTS contracts could hit 10 million, and the total amount could reach a massive 700 billion rubles by the end of 2025. That's some serious growth potential!
But, what's holding this baby back?
Well, two main issues are causing a headache for the LTS program: lack of public awareness and inadequate government support. To put it simply, people just ain't knowin'! Larisa Gorchakovskaya, CEO of NPF "Alpha," believes that a more extensive information campaign is what we need to get more people to hop on board. She also suggests leveraging "Gosuslugi," MFC, and other heavily-trafficked, trustworthy spots to attract participants.
Another issue is the co-financing problem. It's not offering enough support to those who need it the most. Pavel Mitrofanov, the general director of "Expert Business Solutions," explains that while people with monthly incomes up to 80,000 rubles are getting a fair shake, those with incomes exceeding 150,000 rubles are only shouldering a quarter of their contributed amount as co-financing. Ouch!
Wait, there's more!
The transfer of OPS (Optional Individual Pension Savings) from one fund to another is another hurdle standing in the way. Larisa Gorchakovskaya highlights the difficulty in managing these accumulated funds, making the process inconvenient for many.
Moreover, new funds face an uphill battle due to the high entry threshold. The qualification process for formed pension savings is strict, and new contenders are left out until they meet certain criteria. In addition, any attempt to become a client at another fund results in a five-year fixation, which most citizens are not willing to accept.
So, there you have it - the long-term savings program's current challenges and the possible solutions for increased participation and public awareness in Russia. Keep an eye on this space for updates, and make sure you secure your financial future!
Investing in the long-term savings (LTS) program presents an opportunity for businesses and individuals in Russia to secure their financial future. However, the growth and success of the LTS program are hindered by two main issues: lack of public awareness and inadequate government support. To boost participation and awareness, a more extensive information campaign is required, utilizing trustworthy platforms like "Gosuslugi," MFC, and others. Additionally, addressing the co-financing problem, particularly for those with incomes exceeding 150,000 rubles, and streamlining the process for transferring OPS from one fund to another could be key to overcoming these challenges and tapping into the program's significant growth potential.
