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The Russian pension capital will turn NSPF into managing and insurance companies

As part of the concept of individual pension capital (IPC) developed by the Ministry of Finance of the Russian Federation and the Central Bank of Russia, it is planned to transfer compulsory pension insurance (CPI) funds to citizens. For consolidation the entire systemic and legal pension structure changes: non-state pension funds (NSPFs) at the savings stage will become management companies, and at the payments stage, will become insurers requiring a serious change in legislation and raises the issue of admitting not only NSPF to pension money, Kommersant writes.
The Russian pension capital will turn NSPF into managing and insurance companies

Since the basic IPC concept implies the transfer of pension savings to citizens’ ownership; they will also be transferred to the trust management of the NSPF. “NSPF becomes a management company,” says one of the newspaper’s interlocutors. According to the Civil Code (CC), “the transfer of property to trust management does not entail the transfer of ownership of it to the trustee”. In this case, the trustee may take "any steps and formalities in the beneficiary interests under the contract." The trustee reimburses the client for lost profits during the management period. Recovery of property transferred to trust management is not applied, except in the case of personal bankruptcy.

However, the expert discussion participants note that at the stage of payments, the NSPF actually turns into a life insurer for the client. “In case of life pension, the fund sells life annuity for the IPC funds, which means that these funds become the fund’s property,” one of the interviewees points out. According to him, the amendments will stipulate that the NSPF monthly payments must necessarily be indexed either to inflation or another index, for example, the profitability index on government bonds.

As one of the print sources indicates, the innovations under development will require major legislation amendments. “It will not be possible to take trust management from the Civil Code in relation to the IPC,” he said. - We need a specialized law.” NSPF accounting will also require significant changes. The system of investing funds under IPC, as well as the licensing of NSPF will surely be changed.

“Separating customer funds makes both stress testing and investment restrictions meaningless. If the current responsibilities of NSPF-owners are imposed on NSPF-managers, it will look at least strange,” says Alexei Timofeyev, NAUFOR President. According to him, the current restrictions are logical and good for institutions that have a compulsory nature; with trust management, guarantee systems are sufficient.

Source: Kommersant

Photos are from open sources.

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