Russians have chosen monikers for their savings aimed at fund retirement
Russians' Pension Saving Habits and Challenges
A majority (64.3%) of Russians are planning to save over 1 million rubles for their pensions, while only a minuscule 2.4% anticipate accumulating over 10 million rubles. The proportion of those concerned about their savings has significantly decreased: last year, 70% of respondents planned to save less than 1 million rubles, compared to the current 35.7%.
As for the pension savings landscape, just 34.3% of Russians have started saving. The most popular tools are traditional bank deposits (26.8%) and cash savings (7.8%). Interestingly, the long-term savings program (LSS) is gaining popularity, with SberNPF noticing an increase in interest. According to the Central Bank, as of January 2025, 3.3 million contracts were concluded under the LSS, totaling 245 billion rubles.
In a study by NPF "Evolution" and the Financial University under the government, it was found that a majority (89%) of Russians do not make financial savings to secure their desired pension. Roughly 43% rely on state pensions, and another 27% anticipate future personal savings, including savings in non-government pension funds (NPFs). Moreover, over half of respondents expect help from their relatives and children in their older age.
According to Anatoly Nikitin, a Moscow region Duma deputy and head of the Union of Pensioners of the Moscow region, to receive a pension of 110,000 rubles in old age, one would need to accumulate 639 pension points, which requires earning a salary of 230,000 rubles for almost 64 years.
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Influencing Factors and Savings Tool Effectiveness
Several factors contribute to the savings habits of Russians, and the efficacy of various savings tools varies. Here is a snapshot:
Factors Influencing Savings Habits:
- Economic Conditions: The ongoing military conflict and economic sanctions have led to an increase in inflation, impacting purchasing power and eroding the worth of savings[1][2]. This instability complicates long-term financial planning.
- Inflation and Economic Instability: High inflation rates, such as those forecasted to decline to 7.3% by the end of 2025, directly affect savings[1]. The devaluation of savings due to inflation encourages some Russians to keep cash or invest in perceived safe-havens.
- Government Policies and Support: Pension increases, like the 7.3% hike planned for early 2025, aim to alleviate some financial pressures but also highlight the dependence on government support rather than personal savings[1].
- Social and Political Factors: Public opinions concerning fairness in pension distribution, particularly regarding payments to residents in occupied territories, can influence political attitudes and savings behaviors[2].
Effectiveness of Savings Tools:
- Bank Deposits: These are usually considered stable but offer low interest rates compared to inflation, potentially reducing the real value of savings over time.
- Cash Savings: Keeping cash can be a response to uncertainty but does not generate interest and may lose value due to inflation.
- Long-term Savings Programs (LSS): These programs, often connected to investments or pension funds, can offer growth prospects but are vulnerable to market volatility and require a long-term perspective to prosper [3]. Russia's LSS, if launched, could potentially offer a structured means to save for retirement, provided it addresses economic risks.
Endnote
Russians are faced with difficult economic conditions affecting their ability to save effectively for pensions. Savings tools like bank deposits and cash may not keep pace with inflation, while long-term savings programs offer growth prospects but are exposed to market instability. Effective retirement planning in Russia necessitates navigation through these complexities and possibly combining government-backed programs with private savings methods.
- Despite the increase in inflation due to economic instability, a majority of Russians are still planning to save over 1 million rubles for their pensions, while only a minimum of 2.4% anticipate accumulating over 10 million rubles.
- The long-term savings program (LSS) is gaining popularity, with SberNPF noticing an increase in interest, as of January 2025, 3.3 million contracts were concluded under the LSS, totaling 245 billion rubles.
- Influential factors impacting savings habits among Russians include economic conditions, inflation and economic instability, government policies and support, and social and political factors.
- Efficiency of savings tools varies; while bank deposits and cash savings may not keep pace with inflation, long-term savings programs offer growth prospects but are exposed to market instability. Effective retirement planning in Russia may involve a combination of government-backed programs and private savings methods to navigate these complexities.
