PFR budget 2018: pension payments to increase by 279 bln rubles, social benefit payments by 11.8 bln rubles

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26 october 2017

Consistent with the Russian Pension Fund’s draft budget for 2018 and the planning period of 2019 and 2020, the PFR expenditures on paying pensions to Russian citizens will grow by 279 billion rubles to 7.15 trillion rubles in 2018. The expenditures on paying social benefits will go up 11.8 billion rubles to 981 billion rubles.

The draft PFR budget envisages a rise of insurance pensions with due account of the temporarily modified procedure of insurance pensions’ indexation. State pensions, including social pensions, will be increased in accordance with the current pension laws and the index of growth of the pensioner’s subsistence minimum in 2017.

For instance, insurance pensions, including the fixed payment, of non-working pensioners will be enlarged by 3.7% on January 1, 2018, which is 0.5% higher than the forecasted inflation rate. After the indexation, the fixed payment will amount to 4,982.9 rubles per month, while the pension point value will reach 81.49 rubles (78.58 rubles in 2017). An average annual size of the old-age insurance pension will grow to 14,075 rubles (161.3% of the pensioner’s subsistence minimum).

State pensions, including social pensions, of working and non-working pensioners will increase by 4.1% on April 1, 2018. As a result, an average annual size of the social pension will reach 9,045 rubles (103.7% of the pensioner’s subsistence minimum). An average size of the social pension of children with disabilities and people with lifelong disabilities of the first group will amount to 13,699 rubles.

Same as before, there will be no pensioners in Russia in 2018 with a monthly income below the pensioner’s subsistence minimum established in the region of residence. All non-working pensioners will be receiving social supplements, which will increase their pensions to the pensioner’s subsistence minimum. Given a possible decline of the pensioner’s regional subsistence minimum, it is planned to maintain the income of non-working recipients of federal social supplements on the level no lower than on December 31, 2017. The PFR budget allots 94.5 billion rubles for those purposes.

The draft budget assigns 14.7 billion rubles for paying pension savings in the form of funded pensions, and term and lump-sum payments.

Starting February 1, 2018, the monthly social benefits of federal benefit holders will be increased by the forecasted 2017 inflation rate of 3.2%. The Pension Fund will allot 450.6 billion rubles for paying monthly social benefits.

Russians looking after disabled citizens will continue to receive compensations of 1,200 rubles per month, while the Pension Fund monthly pays 5,500 rubles to non-working parents of children with disabilities and persons with lifelong disabilities. There are plans to spend 73.2 billion rubles for those purposes in 2018.

In addition, the Pension Fund will continue to issue maternity capital certificates and make maternity capital payments in 2018. The PFR budget assigns 341.4 billion rubles for those purposes. The size of maternity capital will not change next year; it will remain 453,026 rubles.

The Russian Pension Fund’s budget 2018 has balanced revenue and expenditures in part unrelated to the formation of pension savings, and such PFR expenditures are planned to reach 8,236 billion rubles. The budget expenditures will exceed the revenue by 106.6 billion rubles in part related to the formation of pension savings because of the transfer of pension savings to private pension funds consistent with the choice of the insured person. The deficit will be covered with pension savings operated by the state and private management companies, which are estimated at 1 111.2 billion rubles as of January 1, 2018.

The Pension Fund’s overall revenue in 2018 is expected to reach 8 333.3 billion rubles or 8.6% of the Russian GDP. The PFR budget expenditures will stand at 8 439.9 billion rubles or 8.7% of the Russian GDP.

The insurance pension will remain the primary type of pension in Russia in 2018. Such pensions will be received by over 40 million people. Another 3.7 million people will be receiving state pensions.

In 2018, the PFR will continue to subsidize programs of Russian constituent territories, which fund construction, renovation, and repairs of nursing homes for senior citizens and persons with disabilities, develop material and technical infrastructure of those facilities, and organize computer classes for pensioners. The Pension Fund provides the subsidies on terms of co-funding social programs of Russian constituent territories. The PFR budget 2018 allots 1 billion rubles for those purposes.