The financial crisis in Russia is reaching a new level: there are plans to divert pension funds to Putin’s fund
2 November 18:20
The Russian Ministry of Finance has drafted a bill on the mandatory transfer of pension savings into a “long-term savings” program. If the Russian authorities approve the initiative, it will affect the pension savings of 71 million citizens, totaling 6.6 trillion rubles, according to "Komersant Ukrainian", citing Russian propaganda media.
The bill provides that the automatic conversion of Russians’ pension savings will begin on April 1, 2027. It will affect both clients of funded pension funds (with total savings of 3.6 trillion rubles) and “silent participants,” that is, those Russians who have not submitted applications to transfer their pension savings to NPFs or private companies (they have accumulated a total of about 3 trillion rubles).
Citizens’ funds will be directed into the Long-Term Savings Program (LTP), which is, de facto, an alternative pension system in the Russian Federation. There, the funds will be managed by an “authorized fund” with mandatory state participation. The bill allows citizens, after transferring their pension savings to the LSP, to conduct transactions involving their savings through NPFs or the “State Services” portal, but it does not clearly explain how or where these funds will be invested under the Long-Term Savings Program.
The Long-Term Savings Program was launched in 2024 at the initiative of Russian dictator Vladimir Putin, but it has not gained popularity since its inception. Between 2024 and 2026, Russians signed a total of 13 million contracts with the new program, and the amount of funds raised barely reached 1 trillion rubles. In response, Putin called on the government to more actively encourage citizens’ participation in the program.
The official goal of the Individual Savings Account program is to convert Russians’ private savings into “long-term savings.”
“We want this money to be usable, to be inheritable, and to be withdrawable in the event of special life circumstances,” stated Anton Siluanov, Deputy Prime Minister and Minister of Finance of the Russian Federation, last summer.
At the same time, Igor Shuvalov, head of VEB.RF—the state corporation that manages pension savings—said that the state needs citizens’ money for “investments in modern technology projects.” In practice, VEB and the non-state pension funds (NPFs) invest pension savings primarily in government bonds, deposits, and shares of the largest companies.
The bill on the automatic conversion of Russians’ savings into state pension funds is being discussed against the backdrop of a sharp deterioration in the federal budget due to the fifth year of the war in Ukraine. The budget deficit for the first nine months of 2026 amounted to 5.2 trillion rubles, or 2.2% of GDP. For the period from January through September, the figure was 50% higher than during the same period last year. According to the Ministry of Finance’s estimates, the deficit for the full year will amount to 7.3 trillion rubles, which is twice as high as initially planned.
To cover the budget deficit, Russian authorities have been raising taxes for three consecutive years: in 2025, the corporate income tax rate was increased; starting in 2026, the VAT rate rose to 22%, and a tax reform for small businesses was launched; and in 2027, a tax on excess profits for businesses and “passive income” for individuals—including bank deposits—is planned.
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