Embedded effect: companies will encourage employees to save for retirement
Businesses will begin to encourage their employees to save for retirement. In Russia, they want to introduce tax incentives for employers who co-finance long-term savings programs for staff. This is a new tool that the authorities are promoting as an analogue of the pension system: 4 million people have already invested in it. The relaxation can be earned as early as 2026, Anatoly Aksakov, head of the State Duma Committee on the financial market, told Izvestia. Almost half of the companies are ready to support their employees in this way. This will help attract long—term money to the economy, and businesses will attract people in conditions of a shortage of personnel. Whether the PDS will become more popular and what are its pros and cons is in the Izvestia article.
What is PDS and how will employees be helped to save for retirement?
In Russia, they plan to launch tax incentives for employers who co-finance the personal income tax of their employees. The authorities positively assess this initiative, Anatoly Aksakov, head of the State Duma Committee on the financial market, told Izvestia. He admitted that this measure will work as early as 2026.
PDS is a voluntary savings product that can be issued through non—governmental pension funds (NPFs). Citizens make contributions to their own account, and the state is already co-financing investments of up to 36 thousand rubles (depending on a person's income level) every 12 months for the first ten years after joining the CPA. In addition, the program provides for a tax deduction for citizens of up to 52 thousand per year (to receive them, you need to invest 400 thousand).
The upcoming innovation will allow companies to take into account employee contributions as their expenses, explained Sergey Belyakov, President of the National Association of Non-Governmental Pension Funds (NAPF). This way they will be able to reduce the base when paying income tax.
Russian President Vladimir Putin proposed introducing a tax incentive for businesses that co-finance the long-term savings program for their employees back in June 2024 at the SPIEF. This initiative was recently approved by the Government's commission on legislative activity.
The new benefit will allow the employer to co-finance the accounts of its employees' long-term savings programs within 12% of the payroll of all staff, said Sergey Belyakov from NAPF. Organizations will be able to transfer more, but the relief will no longer apply beyond this share. Contributions will be paid from the net profit of the company.
This initiative was supported by NAPF, Sberbank, VTB and NPF Gazfond. It is logical if an employer can set any co-financing ratio depending on their personnel tasks, as is currently the case in corporate pension programs, the VTB press service noted. For example, the amount can be linked to the amount of funds that an employee will contribute to receive maximum government support per year. If he pays 36 thousand rubles, then the company will add the same amount at a one-to-one ratio.
In fact, the PDS can become an analogue of corporate pension insurance. However, for the effective implementation of this tool, it is necessary to carry out extensive educational work among employees, warned Anna Gondusova, head of Product Development at Alfa Capital Management Company.
Will companies pay extra to employees through the PDS and why is this necessary?
Now the demand for a long—term savings program is growing - by April 1, 2025, Russians had signed more than 4.1 million such agreements and had already contributed almost 300 billion rubles, Sergei Belyakov said.
— At the same time, the introduction of tax incentives for employers can significantly accelerate the growth of the number of participants in the PDS and the volume of investments in the program. This is a real economic benefit for businesses by reducing the tax burden, which is especially important when salary indexation is limited," said Ruslan Westerovsky, Senior Vice President and Head of Wealth Management at Sberbank.
He added: this measure creates additional incentives for businesses to expand the social package, which is especially important in conditions of high competition for qualified personnel and their shortage. Also, the employer's participation will increase employees' trust in the program and motivate them to make regular contributions, forming a culture of long-term savings.
For citizens of the CDP, this is a great incentive to think about their personal financial future. In an unstable economy, financial literacy and planning are becoming key skills, said Sergey Belyakov from NAPF.
According to him, the development of such projects is also important for the state. The more long-term money flows into the country's economy, the more large infrastructure projects the authorities will be able to implement. In addition, for the state, the growth of personal savings of citizens will reduce the future burden on the pension budget and contribute to increasing social sustainability, said Ruslan Westerovsky from Sberbank.
After the benefits are introduced, participants in corporate programs will be able to triple their personal contributions rather than double them, said Dmitry Chernomorsky, Director of the Department for Work with Partners and Corporate Clients at Gazfond Pension Savings. Moreover, employees will also receive a guaranteed income, taking into account the possibility of refunding personal income tax from contributions and investment income from NPFs.
Currently, 46% of companies are ready to support employee participation in PDS, as can be seen from a study by Sberbank of Russia and "Work.ru". Moreover, half of them are only subject to the introduction of tax incentives. This confirms that the initiative is capable of giving a powerful impetus to the development of the program, Ruslan Westerovsky emphasized.
Probably, first of all, large employers from the public sector, the financial industry, IT, industry and energy will become more active, said Vladimir Chernov, analyst at Freedom Finance Global. These are the companies that already offer employees various bonuses and social programs. SMEs, especially in the regions, will need additional support or methodological assistance to participate, the expert believes.
The pros and cons of investing in a long-term savings program
The Chamber of Commerce and Industry (CCI) of the Russian Federation generally supported the proposal on tax benefits. On the one hand, such changes can create an additional tool to improve the financial stability of employees in the future. However, on the other hand, there are questions about how the mechanism will work in practice. After all, employers can directly increase the salary of employees, and then they will immediately receive income. In such circumstances, the attractiveness of the long-term accumulation scheme may be limited, warned Alexey Krylov, an expert at the Council on Financial, Industrial and Investment Policy of the Chamber of Commerce and Industry, a tax consultant.
PDS is still a fairly young instrument and its popularity is still limited, including due to weak motivation for citizens and not very attractive profitability, said Vladimir Chernov from Freedom Finance Global. Most likely, co-financing contributions from businesses with tax preferences will be a powerful incentive, especially if it is designed as a simple, understandable and repeatable mechanism. People will begin to see the PDS not only as a personal financial instrument, but also as part of a social package, similar to the VMI or food compensation, the expert expects.
Strict government regulation will be required to avoid abuse, Maxim Kolyadov, head of work with individuals at Insurance Broker AMsec24, warned.
Among the risks of the initiative, a temporary reduction in tax revenues to the budget can also be noted, said Vladimir Chernov. But, according to him, it is partially compensated in the long term through increased investment and increased financial stability of the population. However, starting this year, income tax has been increased from 20% to 25%, so it is unlikely that the budget will really feel a decrease in revenue.
In general, Russians now have different ways to save money for retirement. The main advantages of the long—term savings program are additional benefits from the state (tax deduction, co-financing from the state, and companies can join). However, funds are blocked there for 15 years (or until the age of 55 for women and 60 for men).
Another option is to invest money in the stock market. This can be done directly or, for example, through individual investment accounts. There are also benefits (tax deduction), but the funds will not be withdrawn for at least five years. In addition, you can lose money on the stock market — profitability is not guaranteed. Funds can also be deposited. Now the rates on them reach up to 20%, but they are usually much lower.
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