Pensions World

A roundup of recent worldwide news and developments in the pensions arena, by Anne Bennett, Mercer

Russia: more expatriates in Russia to pay social insurance charges

Many more foreign workers in Russia will be subject to a social insurance tax payable by employers on their income from 1 Jan 2012, under a package of social insurance measures recently signed by the president. The tax previously applied only to foreign nationals with residency status, but now those in Russia on a temporary basis on Russian employment contracts of at least six months’ duration will be subject to contributions to the pension scheme, although not to the medical or social funds. For the tax year 2012–13, the premium will be 22% on income up to 512,000 rubles (£10,000) and 10% on income above that amount. “Highly qualified specialists” earning at least 2 million rubles (£40,000) per year will be exempt. Under the same law, Russian citizens will see a temporary drop in the total social insurance premium from 34% to 30% on income up to the 512,000 ruble threshold, but there will be a new 10% rate for pension contributions on excess earnings. Further changes to the contribution structure will be brought in from 2014. 

Poland: ECJ rules against private pension funds’ overseas investment restriction

Poland currently imposes a 5% limit on overseas investments made by Open Pension Funds (OPFs). OPFs are the private pension schemes which handle the compulsory second pillar contributions under Poland’s three pillar pension system. Two years ago, the European Commission referred this issue to the European Court of Justice (ECJ) which has now ruled that the limit on overseas investments breaches the rule concerning the free movement of capital between member states and that Poland must lift the investment restriction.

Austria: pension reform proposals

Wide ranging reforms of the law governing pension schemes (Pensionskassen) have been proposed by the government. There are currently 17 Pensionskassen in Austria, operating on either a single or multi-employer basis. Under the proposals, member choice would be increased, with options including a “security pension” with a guarantee on the initial payment level, a lifecycle investment model and the option to transfer to an insurance based product. Employers would have more scope to vary contributions. The minimum number of employees required for an employer to have its own “pool” (VRG) within a Pensionskassen increases from 1,000 to 10,000.