Long-Term Savings Program: A New Approach to Financial Planning

The Long-Term Savings Program (LTSP) was created to replace the lost funded portion of the pension and offer citizens a more flexible tool for long-term savings.

It allows not only to accumulate savings for retirement, but also for other important purposes, such as paying for education, purchasing real estate or helping children.

Who can participate?

Any adult citizen of the Russian Federation can join the program, regardless of age and employment status.

This can be an employee, an individual entrepreneur, a self-employed person or even a pensioner.

The program also provides for the possibility of participation by an employer, who can transfer contributions to the LTSP for their employees.

State co-financing

The program provides for state co-financing for 10 years.

The amount depends on the participant’s income and their own contributions. For example, with an income of up to 80,000 rubles per month, the state doubles the contribution, and with an income of more than 150,000 rubles, co-financing is 1:4.

When can I get my money?

The program is designed for long-term participation, but there are flexible terms for the return of funds. Money can be withdrawn without losses in three cases:

• After 15 years of participation in the program.

• Upon reaching 55 years for women and 60 years for men.

• Upon the occurrence of special life circumstances, such as expensive treatment or the death of a breadwinner.

How to choose a fund?

The PDS is available through non-state pension funds (NPF). There are 38 of them on the market, 35 of which are connected to the program. When choosing a fund, it is worth considering several factors:

• Where are your pension savings stored.

• Consider your salary bank.

• Evaluate the fund’s profitability over the past 5-10 years.

• Study the fund’s fees.

Guarantee of protection

Funds invested in the PDS are insured by the state up to 2.8 million rubles, including investment income.

The Bank of Russia conducts daily supervision of the funds’ activities, checks their stability, investment strategies and financial indicators. Tax benefits

Participants in the PDS can apply for a tax deduction, which depends on the amount of contributions and previously paid tax. The maximum possible deduction today is 88,000 rubles per year.

What will happen next?
More details (https://minfin.gov.ru/ru/press-center/?id_4=39862-v_skladchinu_s_gosudarstvom_kak_rossiyane_kopyat_s_pomoshchyu_pds)

@minfin55

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