New legislation, Federal Law 299-FZ 2023, will establish a Long-Term Savings Program (LTSP), offering individuals a new option for tax-efficient retirement savings, effective January 1, 2024. The LTSP follows several unsuccessful attempts in recent years to introduce a framework that aims to encourage individuals to save actively for retirement.
Noteworthy aspects of the LTSP include:
The historical interest on the part of employees in retirement savings has been somewhat undermined by a regulatory environment that has experienced multiple pension reforms and numerous significant tax changes, as well as by relatively low life expectancies and a general mistrust of long-term savings plans. In addition, the tax rate on earned income is only 13% (15% on annual income in excess of 5 million rubles), thus limiting the general interest in deferring compensation. Among companies surveyed by WTW in 2023, only 14% have supplemental occupational retirement benefit plans (typically in non-associated multiemployer defined contribution NSPF vehicles).