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. Last Updated: 07/27/2016

Pension Fund's Billions Ready for Management

The Pension Fund on Wednesday signed a two-year contract with Vneshtorgbank that gives the state-owned banking giant full control of the billions of pension dollars that 40 million future retirees will soon be able to invest.

Unified Depositary Co., or ODK, a fully owned VTB subsidiary, last week won a government tender to be the specialized depository for pension payments after putting up 5 billion rubles ($163 million) in guarantees.

ODK will be responsible for overseeing purchases of government bonds by the private companies the government will choose to manage pension accounts, Pension Fund chief Mikhail Zurabov told reporters after the signing ceremony.

"Control will be very thorough and on an every-second basis," he said, adding that ODK is empowered to annul deals that violate the law.

"I feel very much like a father who has not yet married off his daughter... but who has identified the man who will see to it that the marriage is a decent one," Zurabov said.

"[VTB chairman Andrei Kostin] is the man who can at any minute enter the bedroom and check whether what is happening there is in line with my agreement with the company on how to work with my daughter. But the bad thing is that so far we don't know who else will be in the bedroom," said the visibly excited Zurabov. "There are 60 people ready to enter into relations with our daughter."

Kostin said that he will now be personally responsible for ensuring a large part of the nation's retirement money. "We have no right to let the efforts of the government or the Pension Fund be discredited or unsuccessful," he said.

The 60 suitors Zurabov referred to are the 59 private investment companies that have applied to manage pension accounts. On Thursday, a special government commission will name which of those 59 "suitors" will have the right to manage part of the 40 billion rubles currently collected for the retirements of women who are currently under 45 years old and men who are under 50. Next year this figure will jump to 170 billion rubles and is expected to hit 1.3 trillion rubles by 2010.

Alexander Chernoivan, a member of the commission, said that most of the 59 applicants complied with tender conditions, but questions arose concerning 10 of them.

Under the original schedule of the government's ambitious revamp of the national pension system, future pensioners were to select by Oct. 15 which of the approved management companies would handle their accounts. Zurabov, however, said Wednesday that this deadline may be moved back to Dec. 1 because of delays in getting personalized account information printed and mailed.

"In my opinion, this year it is important for the system to start work. If this happens then we can assume that the most technologically complicated stage of the reform is complete," he said.