Salaries in 2020 Grew Faster than Pensions in Russia

According to the report of the department on the execution of the budget of the Pension Fund of Russia, the coefficient of salary replacement with an insurance pension in the Russian Federation has fallen by the end of 2020. 

According to the Accounting Chamber, this number was just 29.4 percent last year, compared to 29.6 percent in 2019 and 30 percent in 2018. 

At the end of 2020, the average wage was 51 thousand rubles, and the average insurance pension was 15 thousand rubles. At the end of 2020, the number of retirees whose pensions met the International Labor Organization’s guidelines (at least 40% of lost wages) reached 10 million, or about a quarter of those to whom it was allocated. The proportion of them has dropped by 1.8 percent in the last year.

A replacement rate of 40% or above was established for 678.98 thousand individuals out of the total number of pensioners who retired in 2020 (780.87 thousand people) (87 percent ). However, as in 2019, the primary reason for this was that 75 percent of these people had a monthly income of little more than 20 thousand rubles before retirement.

According to the Accounts Chamber report, the PFR budget’s revenues in 2020 were more than 10 trillion rubles, a 17.3 percent increase over 2019, owing mostly to an increase in transfers from the federal budget. The proportion of received interbudgetary transfers in PFR revenues rose from 37.7 percent in 2019 to 46.5 percent in 2020, with almost half (53.4 percent) going to fund insurance pension payments.

In 2020, the PFR paid 7.414 billion rubles on insurance pension payments, which is 361 billion rubles more than in 2019. According to the Accounting Chamber, this is due to a rise in the amount of insurance pensions (5.8% ) and the number of non-working pensioners (those who work are entitled only to an insurance pension without indexation).

The volume of insurance contributions to the Russian Federation’s Pension Fund fell by 206 billion rubles at the end of the year, totaling 5.409 trillion rubles. Simultaneously, this number for 2019 is up 50 billion rubles, or 0.9 percent.

As a consequence, the proportion of contributions in PFR income fell by 8.6 percentage points to 53 percent (from 61.6 percent in 2019) and the amount of money spent on insurance pension payments fell by 2.9 percentage points to 73.7 percent (in 2019 – 76.6 percent ). The overall debt on insurance premiums for obligatory pension insurance rose by 6 billion rubles (2.5 percent) in 2020, reaching 265 billion rubles at the start of 2021; individual businesses own 36% of this burden.


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