Out of the 17 million Russians who have registered as self-employed, only 53000 make voluntary pension contributions in addition to the tax on professional income. As a result, millions of citizens risk having to rely in the future solely on a social pension, which is roughly one-and-a-half times lower than an insurance-based pension. Ekaterina Papchenkova, Director of Center for Evidence-Based-Expertise at the Gaidar Institute, spoke to Nezavisimaya Gazeta on the possible ways to solve this issue.
The Federation of Independent Trade Unions of Russia (FITU) considers insufficient adequate social protection for the self-employed as a systemic issue. Although paying the tax on professional income allows individuals to legitimize their earnings, this measure alone does not ensure full accrual of pension rights. Without making additional insurance contributions, a person risks ending up at the lowest tier of the pension system in the future.
Ekaterina Papchenkova reminded that certain support measures for the self-employed are already provided for by law.
"One of the measures is outlined in the law on the platform economy: the requirement for digital platforms to offer preferential terms, such as discounts or reduced commissions, etc., to self-employed individuals who voluntarily pay insurance contributions. This measure has been in effect since October 1 of this year," the expert stated.
Another potential approach is to mandate the payment of insurance contributions up to a required minimum. However, according to Ekaterina Papchenkova, there is no need to rush into such a decision, as it requires an assessment of the potential consequences.
"An alternative option for the self-employed is to make mandatory insurance contributions up to the required minimum. However, such a measure could only be introduced after conclusion of the pilot program for professional income tax and following an assessment of all risks, including risk for the self-employed moving into the shadow economy," the expert explained.