Potential Tax Incentives for Businesses on Account of Employee Pension Payments in Russia
Going Big on Retirement Savings: Russia's New Tax Incentive for Businesses
Looks like we're about to witness a game-changer in Russia's retirement savings landscape. Back in 2024, President Putin suggested a smart move: a tax break for businesses that help their employees save long-term, proposing it at the St. Petersburg International Economic Forum. Now, things are heating up.
The proposal gained approval from the government's commission on legislative activities. According to Sergei Beliakov, boss of the National Association of Non-State Pension Funds (NAPF), this breaking news could become a reality as early as 2026.
With this new rule, employers will be able to co-fund their employees' long-term savings accounts, chipping in up to 12% of the payroll fund. Companies can consider these contributions as business expenses and dock their taxable profits accordingly.
Now, you might be wondering, why should businesses jump on this bandwagon? Well, as it turns out, they're lining up like sailors on leave. Big boys like NAPF, Sberbank, VTB, and NPF "Gazfond" are all for it. VTB even believes it makes sense for businesses to determine their co-financing coefficient based on their employee needs.
Sberbank's Senior Vice President, Ruslan Vesterovskiy, thinks this tax incentive could speed up the growth of the program like a rocket. Not only that, but it could also encourage businesses to beef up their employee perks packages, especially in a tight labor market—not a bad move in these times.
A study by SberNPF and "Rabota.ru" already shows that 46% of companies are ready to back their employees in this savings programme, with half of them needing that sweet tax break to seal the deal.
First launched in Russia back in 2024, the program promises state co-financing of contributions for 10 years (up to 36,000 rubles per year), along with a tax deduction. Funds can be accessed after 15 years or at the age of 55 for women and 60 for men. Contributions come with insurance coverage of up to 2.8 million rubles.
So far, the Ministry of Finance has managed to attract 220 billion rubles to the program in 2024, and they're aiming to double that in 2025. Not too shabby, eh?
Stay tuned for more updates, folks. We'll be keeping an eye on this developing story and making sure you don't miss a beat. #Companies #Pensions #Employees #RetirementSavings
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- In 2024, President Putin proposed a tax break for businesses that help their employees save long-term, aiming to accelerate retirement savings in Russia.
- The National Association of Non-State Pension Funds (NAPF), Sberbank, VTB, and NPF "Gazfond" are amongst the businesses that support this new incentive.
- Sberbank's Senior Vice President, Ruslan Vesterovskiy, believes this tax incentive could speed up the growth of the program significantly.
- Employers will be able to co-fund their employees' long-term savings accounts up to 12% of the payroll fund, with the funds becoming accessible after 15 years or at the age of 55 for women and 60 for men.
