Number of citizens losing income through change of pension fund decreases 4.5 times

News subscription

Code refresh image

29 april 2019

The number of citizens who lose their income through changing their pension fund ahead of time has decreased 4.5 times year-on-year in the first quarter of 2019. Some 15,000 applications of the sort were filed in the first three months of this year, as against 67,000 the year ago.

Same as before, most early transfers (86.5%) were made to private pension funds. On the contrary, most transfers, in which investment income is retained, are made to the Russian Pension Fund, which clients choose as their insurer.

Consistent with the new rules, 625,000 notices of the possible loss of investment income in case of a premature transfer were sent to the campaign participants. Most notices were sent via the Public Services Portal.

Notification about consequences of the premature change of one’s pension fund is one of the new measures implemented in the ongoing campaign. The number of channels for filing a request to transfer pension funds was reduced this year. The adjustments aim to preserve savings of citizens and to reduce the number of unlawful transfers accomplished without the owner’s knowledge.

From now on, it is possible to file for transferring funds only via offices and client services of the Russian Pension Fund or via the personal account section on the Public Services Portal. Applications can be submitted to the PFR by either the insured person or his or her representative. In contrast to previous years, applications submitted by mail or courier service are no longer processed.

Depending on which of the two channels is chosen, the applicant is mandatory informed about the loss of investment income, which happens in case of premature transfer of pension savings (before the expiry of the five-year period of savings’ investment by the same fund). Losses are calculated individually and indicated in the notice which the applicant or his or her representive must sign either by hand or digitally.

Same as before, transfer of savings via the Public Services Portal requires a qualified electronic signature provided by authorization centers, which are accredited by the Russian Ministry of Digital Development, Communications and Mass Media (read more about how to receive and use the qualified electronic signature).

It is still possible to change the management company, while keeping PFR as one’s insurer in the personal account section on the Russian Pension Fund’s website. Just like in filing the application on the Public Services Portal, that would require the qualified electronic signature. If pension savings are accumulated in the PFR, it is possible to choose the management company or the investment portfolio of the management company every year without losing investment income.

Another innovation concerns application deadlines. Previously, applications could have been submitted throughout the year, but now the deadline is December 1. The reason is that one may decide against transferring pension savings to the chosen fund within a month since the submission of the application. In this case, the refusal to change the insurer must be reported, after which a new application for transferring funds could be submitted or funds could be kept in the current fund. Without the notice, a decision on the transfer of funds will be made consistent with the earlier statement.

The transition campaign results are summed up within the same period. Decisions on the applications received in 2019 will be made by March 1, 2020, (in case of the early transfer) or by March 1 of the year when the five-year period of the funds’ management by the same fund expires (in which case investment income is not lost). Pension savings will be transferred to another fund before March 31.