Budget Review of the Russian Social Fund and Pension Financing

The State Legal Administration of the President is reviewing methods to streamline the budget of the Russian Social Fund by limiting inter-budget transfers from the federal budget. This is reported by RBC based on a letter from Sergei Pchelintsev, the deputy head of the department, to Mikhail Shmakov, president of the Federation of Independent Trade Unions of Russia. The discussions focus on leveraging reserve funds from prior years, relaxing restrictions on spending funds allocated to compulsory pension insurance, and gradually reducing subsidies that cover insurance premiums for selected job groups over multiple years. In 2023, transfers from the federal budget to the Social Fund exceeded 4 trillion rubles, representing roughly 30 percent of the fund’s total revenues. Of this amount, approximately 1.4 trillion rubles supported pension-related transfers, about 130 billion rubles financed sick leave payments, and the remaining portion covered other social functions managed by the fund. Even as a deficit persisted at the primary budget level, the Social Fund entered 2024 with a total balance surpassing 1.1 trillion rubles, helped by surpluses accumulated in previous years. A portion of these funds was deposited in bank accounts and certificates, yielding interest and preserving liquidity for ongoing social initiatives. The Federation of Independent Trade Unions of Russia did not back redirecting funds to purposes outside compulsory retirement insurance. The federation’s vice president, David Krishtal, stressed that such a redistribution would amount to another move by the financial bloc to install itself as a dominant manager of social funds, and that it would not be supported. Earlier reports indicated that pension levels in Russia had risen over the past decade as financial support for families with a breadwinner evolved; by 2024 the average pension reached 8,134.88 rubles, with annual indexation reflecting inflation and adjustments tied to service length and the salary level of the deceased family member. Past statements from the Social Fund have touched on how service in northern military districts could influence retirement benefits, with considerations about regional workload, risk, and the long tenure needed to maximize pension outcomes.