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. Last Updated: 07/27/2016

Fund Reaches Out to Future Retirees

A million people retire every year, and the government intends to tell each one of them ahead of time how much their pensions will be.

State Pension Fund chief Mikhail Zurabov said Tuesday that 180,000 of the 2 million people who will retire in 2003 and 2004 already have been notified by mail about the size of their pensions and the rest will find out before the end of the year.

The fund's information program is part of an ambitious overhaul of the pension system passed by the State Duma earlier this year. It marks the first time that people will have advance knowledge of the size of their pensions -- and the right to negotiate the figure if they disagree.

Zurabov said that under the old law, which expired Jan. 1, pensions were based on the pensioner's salary during the last two years of official employment, or on any five-year period if the person could provide documents to prove it.

"Under the new system we give people the right to reply to the pension fund and apply for a higher rate if they don't agree with the base amount and have the right to get more," Zurabov said.

The next step, he said, will be to inform the 100 million Russians currently employed how much they have accumulated on their pension accounts.

"We hope to have this done by the end of 2003 so that people will be able to use their rights under the new law," Zurabov said, adding that the process is complicated and has never been tried by anyone in Russia before.

Since January, employer contributions to the pension fund, which handles about $15 billion every year, have been split into three parts: base, insured and accumulative.

Beginning in 2004, employees will be allowed to park the accumulative, or investment, part of their employer's contribution in a private pension fund if it doesn't like the state one.

The state fund has already collected more than 13.8 billion rubles ($440 million) in the accumulative portion, which is estimated to grow to 100 billion rubles by 2010.

Zurabov said the fund is planning to invest $4 billion in government securities next year. He said since the start of the year the fund has invested about $700 million, mainly in ruble-denominated government securities and Eurobonds.

The fund stopped investing in government paper in July, when a law regulating pension investments came into force. But Zurabov said he expected the Cabinet to pass a special resolution allowing the fund to do so within the next two weeks.

"In the future we are planning to invest $120 million every month," he said.

According to figures released by the State Statistics Committee on Tuesday, the average pension in the first seven months of the year was 1,319 rubles ($42) a month, 20 percent higher than during the same period last year. The minimum pension is set at 766 rubles, while the highest is 1,734 rubles.