PENSION REFORM IN RUSSIA

The pension system specified in the Russian Pension Law had required modification long before the recent changes occurred because the amount of state retirement pensions was quite low against the background of growing living expenses. Most frequently, it did not ensure reasonable subsistence for a retired person. For the purpose of pension reform in the Russian Federation, Decree 1 of the RF President "On immediate measures seeking to improve the state retirement pension scheme of the Russian Federation" was adopted on April 15, 1996.

By issuing the aforesaid Decree, the President of Russia supported the idea of transition to a new procedure for calculation of pension amount based on consistency between the amount of the pension and length of service. In connection with this, on June 23, 1997, the State Duma adopted the Federal Act "On the procedure for calculation and increase of state retirement pensions in the Russian Federation."

The Act has stipulated that effective February 1, 1998, with growing wages in the country, state retirement pensions will be subject to calculation and increase using a pensioner individual rate. It is suggested that a fixed pension based on minimum monthly wages should be rejected with introduction of a pensioner individual rate. This means that a pensioner will be entitled to select the calculation of a state retirement pension based on an individual rate claiming a higher pension value (Clause 3 Article 7 of the Act "On state retirement pensions in the Russian Federation.")

In this case, the main point is calculation of a pension subject to the average monthly wage of the retired person in comparison with the average wages in the country which will be announced on a quarterly basis by the State Committee of the Russian Federation for Statistics and approved by the RF Governmental Decree.

The new law only applies to retired persons who had received a state retirement pension prior to its adoption, and to those who will retire thereafter and seek state retirement pension for the first time. Retirement, disablement, long-service and survivor benefits will be provided for.

The law is not applicable to workers past retirement age who continued working after February 1, 1998 and a received state retirement pension (Clause 6.1). more...

It is known that effective February 1998, the Russian pension system has substantially changed. Will you please give more details.

What is the current procedure for calculation of pensions?

Can a layman calculate his/her pension in accordance with the new pension law?

What is the procedure for calculation of the average monthly wage in order to find the individual rate and to calculate the pension on one's own ?

What amount of the average monthly wage in the country will be applied in the calculation of pensions?

What records will constitute service history referred to in calculation of the amount of pensions under the new law in April 2000 ?

What is the procedure for calculation of pension in lack of service?

What problems may arise in the implementation of the new law and what are its advantages, if any, in comparison with the previous pension law?