Pension Funds and Collective Investments
Non-governmental pension funds provide mandatory pension insurance (MPI) and non-governmental pension coverage (NPC).
NPFs licensed to carry out MPI manage pension savings formed from the MPI payments employers make for their staff. The transfer of employers’ contributions to the funded component of pension has been suspended since 2014, and currently NPFs manage funds accumulated in previous years. All funds providing MPI services are participants in the system for guaranteeing the rights of insured persons. Monies placed with such funds are insured by the Deposit Insurance Agency.
As part of the NPC, funds manage pension reserves formed from the voluntary contributions of legal entities and individuals.
NPF funds are the source of the so-called long money. One of the main trends in recent years is the increase in the share of NPF investments in the real and public sectors of the economy against the background of a contracting financial sector.
NPF funds are invested by management companies, which also manage funds for mortgage coverage and servicemen’s housing provision, insurers’ own funds and insurance reserves, and investment fund assets.
In recent years, retail investors have shown increasing interest in unit and joint-stock investment funds.
In August 2018, the Bank of Russia registered the trust management rules of Russia’s first exchange-traded UIF, marking a new stage in the development of the Russian market for investment funds.
The Bank of Russia simultaneously regulates and supervises investment fund managers, NPFs and investment funds: it establishes rules for the collective investment market and ensures that they are complied with. Given the social importance of participants in the collective investment market, primarily NPFs, the Bank of Russia focuses on their financial stability and reliability, countering unfair practices and financial consumer protection.
In addition to the Bank of Russia, the sector has another controlling institution, the specialised depositories of UIFs and NPFs (they keep funds’ assets and control their management), and a regulatory institution, the self-regulatory organisations of collective investment market participants (they establish standards for their members). Their activity is also controlled by the Bank of Russia.