Capital ahead: 40% of Russians' savings are proposed to be made long-term
According to government materials reviewed by RIA Novosti, by 2030, the share of savings of Russian citizens placed for a long time should reach 40% of the total savings. It is assumed that this will be achieved through the formation of such conditions in the financial market that will increase interest in investments even in the current economic situation. Izvestia investigated which tools can become the main drivers of the growth of long-term savings, as well as what barriers currently prevent Russians from forming long-term savings and how they can be eliminated.
Attractive tools
A wide range of tools has been launched to attract long-term investments in the country's economy, the press service of the Ministry of Finance told Izvestia.
"There are already over 11 million CDS agreements, and the total number of AIS has reached 6.4 million. The volume of assets on the IIS amounted to 915.3 billion rubles, of which 47% was placed on the IIS-3. To increase confidence in this instrument, a law on the system of guaranteeing funds has been adopted, and it has been operational since the beginning of this year," the ministry said.
The main drivers of the growth of long-term savings can be instruments that combine government support and market profitability, Igor Komarov, an expert on the Russian Finance Ministry's NIFI project "My Finances.Russian Federation". These include the long-term savings program, which has high potential, especially if companies co-finance employee contributions as part of a social package.
— Individual investment accounts (IIS) also play an important role. Their new formats provide significant tax benefits and encourage investment for a longer period of time, forming the habit of saving," he said.
In addition, in his opinion, new banking products such as irrevocable savings certificates are promising. They offer higher returns compared to conventional deposits in exchange for a fixed term of funds placement. Against the background of the expected reduction in the key interest rate and deposit yields, the attractiveness of such long-term instruments will increase.
The government wants to turn citizens' savings into long-term investments through the PDS program, Elena Fiveyskaya, director of financial institutions ratings at the NRA rating service, confirmed in an interview with Izvestia. Now she is more interested in older people preparing for retirement. In order to attract more participants, it is proposed to increase co-financing and tax incentives, make it possible to withdraw money without loss in special cases and promote long-term investments, increasing financial literacy of the population.
Igor Komarov believes that the main barriers to forming long—term savings are low incomes and psychological distrust of financial instruments. Many people simply do not have available funds that could be saved for a long time. The solution to this problem is related to general economic growth and an increase in household incomes.
— Another barrier is fear and misunderstanding, — the expert is sure. — People are afraid of financial markets, complex products and possible losses, so they prefer to keep money in cash or on short-term deposits, even if it is less profitable.
According to him, it is possible to overcome this by spending time and improving financial literacy. The longer such tools as PDS and AIS work steadily and show positive results, the more trust they will have. At the same time, it is important to explain to people in an accessible way how these products work and what protection mechanisms they have.
The main drivers of long—term savings growth are already existing tools, possibly with some improvements, Anton Tabakh, chief economist at Expert RA rating agency, told Izvestia.
"The long—term savings program has good potential, but its effectiveness would increase with the participation of employers in co—financing employee contributions," he believes. — It would also be possible to expand tax benefits for ICS or deposits, although this is unlikely in the current budget situation.
The main barriers to forming long-term savings are related to low incomes for a significant part of the population and psychological factors, the economist confirmed. Many people remember historical crises and perceive ruble investments as less reliable than foreign currency investments, although in fact the government and banks have been ensuring the reliability of individual deposits since 1998.
— The only way to overcome these concerns is time and stable positive experience of such tools, — the analyst is sure.
Impact on the economy
The lack of "long" money has traditionally limited Russia's financial system, Anton Tabakh believes. Previously, it was possible to attract some of these resources from abroad, but now this opportunity is missing, so forming your own long-term savings base is becoming a necessity.
Increasing the share of long-term savings, as the expert noted, will reduce the cost of capital and ensure the possibility of implementing investment projects for a longer period of time without dependence on subsidies or government support. This will create a more stable foundation for the growth of business and the economy as a whole.
An increase in the share of long-term savings will lead to structural changes in the economy, Igor Komarov noted. Now investments mostly go through the budget or large corporations, and citizens' funds are usually short and are used for consumption or short-term deposits.
"If we manage to accumulate the savings of the population for a period of 5-10 years or more, businesses will have access to cheap and stable resources," he said. — This will allow companies to implement large—scale projects — to build factories, upgrade infrastructure, and introduce new technologies - without heavy dependence on the budget or high loan rates.
As a result, this will reduce the burden on the state and create conditions for more confident and sustainable growth of the private sector.
The growth of long-term savings in Russia will have a positive impact on the economy, increasing investor confidence and strengthening the country's financial stability, Maria Ermilova, International Financial Adviser, PhD in Economics, Associate Professor at the Department of Sustainable Development Finance at Plekhanov Russian University of Economics, told Izvestia. Additional funds allocated to company development and production contribute to sustainable economic growth and the introduction of new technologies, which increases the competitiveness of domestic enterprises.
— At the same time, the emergence of more qualified investors makes the financial market more stable and reduces sharp price fluctuations. In general, reaching the level of 40% of long—term savings will be an important step to strengthen the financial system and improve the well-being of citizens, she believes.
Izvestia sent a request to the Central Bank, but no response had been received at the time of publication.
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