Pensions for Expats in Russia

Submitted: December 2013

Russia’s pension system is based on social insurance, rather than tax-financing. It is also possible to save privately or through non-state pension funds.

Non-contributory benefits are also paid out to the most vulnerable social groups, including senior Russian citizens without enough social insurance contributions.

Social insurance

Any employer must make contributions towards social insurance, which includes pension saving. Employees need not contribute. The self-employed are also subject to social insurance legislation, but they have to pay on a flat-rate basis (currently US$ 49 per month).

Pension contributions are mandatory, regardless of nationality, even if you are on a temporary visa.  However, some foreign workers are not subject to pension contributions and therefore do not qualify for pension benefits. These include most notably:

Generally, employers must pay 34% of gross salary below a specified threshold, which is currently around US$18,000 per year.

Pension benefits

Currently, the pension age in the contributory system is 55 for women and 60 for men.

Retirement benefits are a major problem for the Russian Government, as they are becoming an ever larger burden on public finances. Nonetheless, the Government has so far refused to raise the pension age until 2018.

As a rule, you need at least five years of contributions before you can get any pension benefit, unless a social security agreement between Russia and your home country applies.

International matters

Social security agreements

Russia may have entered into a social security agreement with your home country. These agreements are primarily designed to avoid discrimination and double social security coverage. In addition, they may “totalise” your periods of contributions in Russia and in your home country. This is particularly helpful if you are expected by either country to have contributed for a long time (e.g. you must have contributed for 40 years to avoid a pension rebate).

It is quite uncommon for the Russian Government to conclude such agreements, except with countries that are politically very close to Russia.

International superannuation planning

In many countries, private superannuation schemes are tax-efficient products. Thus, they are heavily regulated in order to avoid undue tax base erosion. Thus, you should check:

Your home country may have a tax treaty with Russia to avoid double taxation on your foreign pensions. As a general rule, pension payouts are only taxable in your country of residence. That said, you should check your tax treaty to make sure you don’t fall under an exception.

Retaining your foreign pension arrangements may be the most practical option if you don’t intend to stay in Russia. Nevertheless, cross-border superannuation planning is always on a case-by-case basis. It is strongly recommended to seek professional advice regarding this matter.



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