Skip to main content
main content, press tab to continue
Article | Global News Briefs

Russia: New voluntary savings plan to be launched in 2024

By Michael Brough | October 12, 2023

Employees in Russia will soon be able to earn a tax break while saving for retirement, with partial matching contributions from the government and the potential for employer contributions.
Retirement|Health and Benefits|Ukupne nagrade

Employer Action Code: Act

New legislation, Federal Law 299-FZ 2023, will establish a Long-Term Savings Program (LTSP), offering individuals a new option for tax-efficient retirement savings, effective January 1, 2024. The LTSP follows several unsuccessful attempts in recent years to introduce a framework that aims to encourage individuals to save actively for retirement.

Key details

Noteworthy aspects of the LTSP include:

  • Employees will be able to contribute up to 400,000 Russian rubles (equal to approximately US$4,000) per year on a tax-deductible basis to individual LTSP accounts, with partially matching contributions from the government of up to 36,000 rubles (US$360) in each of the first three years of the program. The accounts can also be funded from employer contributions on the employee’s behalf or by transfers from other existing pension savings, including from the formerly compulsory individual accounts managed by non-state pension funds (NSPFs). Funds in those individual accounts have effectively been frozen since 2015.
  • LTSP accounts will be established by individual agreement with participating NSPFs, which will invest the account assets in local government and corporate bonds and other typically lower-risk securities. Members will not be able to select specific investment options. Account holders will be able to change NSPF providers every five years. Thirty-eight registered NSPFs are currently in operation.
  • The government will insure up to 2.8 million rubles in LTSP account assets against the insolvency of the NSPF managing the account. Investment returns will depend on market returns. There is no guarantee of principal or interest.
  • LTSP funds will be available for withdrawal, tax-free, after 15 years of participation or age 60 for men and age 55 for women. Individuals who want to withdraw funds earlier will be able to claim back only their contributions, less the value of tax deductions received, unless withdrawal is for certain hardship situations such as to pay for medical needs. Pension money transferred to the accounts, state matching contributions and accrued interest will not otherwise be available for early withdrawal.

Employer implications

The historical interest on the part of employees in retirement savings has been somewhat undermined by a regulatory environment that has experienced multiple pension reforms and numerous significant tax changes, as well as by relatively low life expectancies and a general mistrust of long-term savings plans. In addition, the tax rate on earned income is only 13% (15% on annual income in excess of 5 million rubles), thus limiting the general interest in deferring compensation. Among companies surveyed by WTW in 2023, only 14% have supplemental occupational retirement benefit plans (typically in non-associated multiemployer defined contribution NSPF vehicles).


Senior Director, Integrated & Global Solutions

Contact us