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Succession of pension savings of citizens

Our government has been stirring up the pension system for decades. Currently, this is one of the most complicated areas in our legislation. It is deemed impossible to calculate the future pension by the ordinary economist, the lawyer or the accountant, it goes without saying, sometimes it seems that employees of the Pension Fund themselves don’t absolutely understand how and what the size of pension depends on, and needless to say, to explain of which parts it is composed. Scores, indices, funded and insurance parts – all these concepts form in a confusing way those minor payments which our government "makes pensioners happy" by.

The insurance part of the pension is the basic form of state pension provision. The pension is guaranteed by the state, but its size depends on the situation that will be in the country at the beginning of payments, first of all – on the ratio of the number of working citizens and pensioners and on the situation with the state budget.

The funded part is the funds of mandatory pension savings, which are managed by professional market participants for the benefit of the future pensioner.

The concept of the “funded part of pension” first appeared in the Russian pension legislation in 2001, when the law On Labor Pensions in the Russian Federation was adopted. This law came into force on January 1, 2002 and marked an attempt to reform the pension system in Russia. Within the meaning of the law, a part of the employer's pension contributions was meant to form the funded part of the pension, however, since 2014, the funded system has been "frozen".

In general, it is incorrect to talk about freezing of a pension. We are talking about the fact that in 2014, the entire amount of insurance contributions has been going to the accumulation of the insurance pension, and funded pension is not financed. This procedure for the accumulation of a future pension has been extended to the next 2019. At the same time, all the funds of pension savings, which were already formed at the end of 2013, do not disappear and do not get lost. They are invested and will be paid to citizens when they reach the pension age.

Thus, within the period from 2002 to 2014, working citizens formed a certain amount of funds, which, in theory, are invested and generate income. But, even if you expect highly-profitable investment of funds, which represent the funded part of pension savings, however, we can assume that for 12 years, even with small deductions, there are certain tidy amounts on the individual personal account of citizens.

In addition to the funded part of the pension, which has formed from the contributions of the employer, citizens who are not used to rely only on the state, have the opportunity to voluntarily pay additional insurance contributions to the funded pension, including under the Program of State Co-financing of Pensions. Thus, the amount that is stored on the personal account of the future pensioner can be quite significant.

In 2018, the government decided to raise the pension age, which means that on the one hand, citizens have the opportunity to accumulate more funds for payment of pensions, but on the other hand, the statistics, unfortunately, is inexorable, not all citizens will be able to retire for reasons beyond anyone’s control.

There is a question, what happens to pension savings of citizens in case of their premature death? And more specifically, in case of death before retirement.

According to the pension legislation, in case of death of the citizen who had the funds of pension savings before allotment of payments on the account of these funds, pension savings are paid to successors of the deceased person.

This payment is made either by the Pension Fund or by the Non-state Pension Fund, depending on where the pension savings were formed.

While alive, a citizen can leave a statement to specify who will be his successor. And it is possible to specify any person, not necessarily included in the circle of heirs. To determine the successors, it is necessarily to apply to the Pension State Fund of the Russian Federation (or Non-State Pension Fund, if pension savings are accumulated therein) and specify their successors and in what proportion the savings will be distributed between them.

If the citizen has not applied for the disposal of pension savings in case of death, the payment will be made to the successors under the law of the first category: to parents, children, spouse, and if there are no such relatives, the payment will be made to the successors of the second category - grandparents, grandchildren, brothers (sisters), according to the general rules of succession under the law.

Pension savings to relatives of the same category are paid in equal shares. The successors of the second category have the right to receive pension savings if there are no relatives of the first category.

If a pensioner dies, who together with the pension has received a fixed-term pension payment fixed on the account of pension savings accumulated on a voluntary basis, including under the Program of State Co-financing of Pensions, the balance of pension savings is also paid to the successors.

The Pension Fund notes that pension savings can be paid to successors if the death of the citizen has occurred:

  • Prior to fixing of payment on account of pension savings or prior to recalculation of its size taking into account additional pension savings (except for the maternal (family) capital funds intended for accumulation of the future pension);
  • After fixing of fix-term pension payment. In this case, the successors have the right to receive the unpaid balance of pension savings (except for maternal (family) capital funds intended for accumulation of the future pension);
  • After one-time payment of pension savings has been fixed but has not yet been paid. It can be received by the family members of the deceased pensioner (subject to joint residence therewith), as well as the disabled dependents (regardless of whether they lived together with the deceased person or not) for 4 months from the date of death of the citizen. If there no such, the amount of one-time payment is included in the inheritance and inherited on a common basis.

If payment of the funded pension has been fixed to the citizen (for an unlimited term), in the event of his death, the funds of pension savings will not be paid to the successors.

To receive the pension savings of a deceased citizen, his/her successors should apply to the Pension Fund or Non-State Pension Fund with the following documents:

  • Passport (birth certificate);
  • Document confirming the identity and powers of the legal representative, if the successor is a minor child;
  • Documents confirming family relationship with the deceased insured person (birth certificate, marriage certificate, adoption certificate, other documents confirming the degree of relationship with the deceased insured person), if the successor is specified in the statement of the insured person, the documents confirming the family relationship do not need to be submitted;
  • Death certificate of the insured person (if any);
  • Insurance certificate of compulsory pension insurance (insurance certificate of state pension insurance) of the deceased insured person or the document issued by the territorial body of the Fund, which indicates the insurance number of the individual personal account of the deceased insured person.

It is possible to apply to the Pension Fund of the Russian Federation in person, either by mail or through an authorized representative.

If the successor sends tan application by mail, the originals of the above documents do not need to be attached, it is enough to attach their notarized copies.

When submitting an application through a representative, his powers shall be registered in the power of attorney certified by the notary.

Payment of pension savings to the successors of the deceased insured person shall be made either through the post office or by transfer of funds to the banking account of the successor.

Term of payment shall be no later than the 20th of the month following the month of the decision on payment. The decision on payment shall be made within the seventh month from the date of death of the citizen. The Pension Fund of the Russian Federation shall send a copy of the decision on payment (refusal to pay) to the successor no later than 5 business days after adoption of the decision.

If the successor has missed the 6-month period of application for payment of pension savings of the deceased insured person, this period can be re-set only by a court decision!