Gaidar Institute researchers, Angelina Shpilevaya and Ivan Ermokhin, in a commentary for Forbes, assessed the likely consequences of transferring citizens’ pension savings into a long-term savings program (LSP).
According to the experts, this measure would generate a significant amount of long-term capital for investment in the economy, while the changes would be virtually imperceptible to most citizens.
The reform under discussion involves transferring accumulated pension savings into a long-term savings program. As noted by Gaidar Institute experts, such a step could simultaneously support the development of the LSP and create additional source of long-term investment for the Russian economy.
Angelina Shpilevaya, a Researcher at the Gaidar Institute’s Mathematical Modeling of Economic Processes Department, explained that the state gains the option to accumulate a significant amount of funds that can be directed toward financing infrastructure, technological, and other development projects. At the same time, the system provides mechanisms to protect citizens’ interests: non-state pension funds are required to ensure the safety of investments and compensate for any losses within established timeframes.
“Transferring existing pension savings into a long-term savings program will immediately create a significant pool of resources for investment in the economy. This will also help the development of the LSP itself, as its growth will be driven not only by new voluntary contributions from citizens but also by funds already accumulated,” noted Angelina Shpilevaya.
According to Ivan Ermokhin, a research fellow at the Gaidar Institute’s Laboratory for the Analysis of Best International Practices, for most Russians, the changes will not lead to significant changes in daily life. If funded pension payments have already been assigned, they should remain in place, and in other cases, the legal status of the funds will change first and foremost.
“For many citizens, the reform may go virtually unnoticed. However, at the macroeconomic level, pooling savings within the LSP will allow for the creation of a large long-term fund that can be used to implement strategically important projects with a long payback period. Such investments can support economic development while simultaneously generating income for future retirees,” emphasized Ivan Ermokhin.
According to experts, the initiative reflects the state’s desire to gradually strengthen the role of voluntary long-term savings while maintaining mechanisms to protect the funds accumulated by citizens.