Rating of NPFs by profitability for 2021 according to the Central Bank

What is NPF?

A non-state pension fund is an organization separate from the state, the main goal of which is to pay pensions to all fund participants. There are such organizations in almost all developed countries. In Russia, the first independent funds appeared in the post-Soviet period, and were engaged in the same thing as throughout the world - accumulating money and issuing pensions.

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In 2021, the decree “On amendments to certain legislative acts of the Russian Federation on the regulation of the activities of non-state pension funds” came into force. The new decree obliged shareholders to compensate for losses in customer accounts. For example, if the director of a non-state pension fund decided to invest the company’s money in a project, but it failed and the organization suffered losses, then the shareholders must make up for these losses.

How do non-state pension funds work in Russia?

Non-state pension funds work in the following way: the client enters into an agreement with the organization, according to which he will transfer certain amounts to his account there on a monthly basis. The client is also given a choice of pension scheme.

When a depositor transfers money to his personal account in an organization, the NPF redirects this money to the pension reserve. From these reserves, money is sent to reliable assets. Such an operation most often takes place through a management company. If the investment was successful, the size of the client’s pension increases. It should also be remembered that about 15 percent of the funds received as a result of a successful investment are sent to the manager of a non-state pension fund or management company. These funds do not go into the manager’s pocket. Instead, the reserve fund is filled with them. They also provide services to non-state pension funds.

When a NPF client retires, the organization begins to calculate how much money he invested in the NPF. Based on the amount received, it is determined what payments the client will receive.

The Central Bank named pension funds with the lowest profitability

According to Alexander Losev, CEO of Sputnik Capital Management JSC, the problem is that the state of the stock market reflects geopolitical tensions more than the financial results of Russian companies. It should also be taken into account that 70% of trading volumes on the stock market in terms of shares in Russia are accounted for by foreign investors, and not by national ones, Losev clarifies. “As a result, Russian investors, against the backdrop of the same sanctions, cannot support the market, which will remain in this state until positive news appears,” says Losev.

It would be unprofitable for funds to sell shares now, because the dividend yield is comparable to the yield on bonds and deposits, and in some cases may exceed them, says Losev.

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However, in general, the return on pension savings will be lower at the end of this year compared to last year and will amount to 8–10% versus 10–12% in 2016, says Yuriy Nogin, director of the ACRA group of financial institution ratings. The reason for this is sanctions and a decrease in yield on bonds and deposits, explains Nogin.

“For now, we shouldn’t react to these indicators as final: the funds have another six months to rehabilitate the picture,” Mitrofanov believes. “Agents will most likely begin to “sell” the low profitability of pension funds based on the results of the third quarter as a factor in changing insurers.” However, Nogin notes that the half-year result is an intermediate result and should not be taken by clients as a signal to change insurer.

Meanwhile, funds with low returns based on the results of the first half of the year remain optimistic. General Director of NPF Future, Nikolai Sidorov, says that the fund will not make decisions about the savings portfolio based on indicators for short-term periods - for six months. The effectiveness of the fund manager can be shown in the long term - from five years, says Sidorov. According to the Central Bank, NPF Blagosostoyanie OPS (in 2015 renamed NPF Future) at the end of 2014 showed a profitability of 1.5%, at the end of 2015 - 5.6%, at the end of 2021 - 4%. Meanwhile, VEB’s profitability in 2014 was 2.68%, in 2015 - 13.15%, in 2016 - 10.53%

As the press service of NPF Safmar said, in the fund’s portfolio, shares make up 30% of the total pension savings. “At the end of the first half of the year, the fund managed to record a positive result due to coupon payments on fixed income instruments - the bond portfolio is 70%,” the press service said.

The press service of NPF Elektroenergetika, which had a return of 4.3% in the first half of the year, said that the fund did not adjust its investment strategy based on the results of the first quarter, since “portfolio fluctuations are always compensated over a longer interval.” “We expect the observed trends to continue and are generally positive about the stock market in an environment of falling interest rates,” the fund said. In 2021, the fund showed a return of 8.9%, in 2015 - 8.5%, in 2014 - 9%, in 2013 - 8.4%, according to the Central Bank.

The remaining funds with returns below VEB did not respond to RBC’s request.

NPF rating by profitability

In order to determine which fund is better to choose, you need to look at the NPF rating. There you can find a fund that suits you best. We have also prepared a table with the NPF rating for reliability.

The main performance indicators of non-state pension funds for 2019-2021 and the full table with data can be downloaded from this link.

The data in the table is taken from the official website of the Central Bank of the Russian Federation. Information is current on 12.06.19.

* — number of insured persons (persons);

** — profitability (in%) of placement of pension reserve funds before payment of remuneration to management companies, specialized depository and fund.

How is the profitability of non-state pension funds determined?

The main reason why it is possible to calculate the profitability rating is the level of income received as a result of investing client funds in reliable and profitable assets.

Other selection criteria for non-state pension funds

Also, no less important than profitability is reliability. Therefore, potential clients try to choose those non-state pension funds that occupy leading positions in both ratings.

Pros and cons of non-state pension funds

It’s worth starting with the fact that there are two types of non-state pension funds - compulsory and non-compulsory pension insurance. Their pros and cons are different.

Advantages of NPF in OPS:

• Reliable investment insurance. Compulsory pension insurance is a service to which any citizen of the Russian Federation has the right. It reliably insures pension contributions, since even if something happens to the NPF, all contributions will be transferred to the Russian Pension Fund.

Minuses:

• Low profitability. Since mandatory payments have a minimum, companies cannot invest in unreliable assets.
• Serious restrictions. Since compulsory pension insurance is enshrined in law, it has a number of serious rules and restrictions that can make life quite difficult for the client.

Advantages of NPF in NPS:

• High profitability. Since the state has imposed significantly fewer restrictions on optional insurance, NPFs can invest in riskier projects that can lead to much greater profits.
• Convenient conditions. There are practically no restrictions on the conditions. The client can adjust the terms of deposits and payments in a way that is convenient for him.

Minuses:

• Serious risks. If something happens to the NPF, there are serious risks that the money will simply disappear and it will not be possible to return it. Then there will be no money, no payments.

How funds function

The activities of NPFs are formally subject to strict adherence to Law No. 75-FZ “On Non-State Pension Funds”.
The essence of the fund is the creation of a financial pyramid under state control. The fund's management directs the accumulated funds received from participants in savings programs to various commercial and financial projects. In theory, the controlling body, the Central Bank of the Russian Federation, should ensure that funds are invested not so much in highly profitable, but rather low-risk projects that could protect depositors’ money from bankruptcy. In reality, everything is completely different. Having received the opportunity to operate large funds, the management of non-state pension funds strives to earn as much money as possible. Numerous violations follow from this.

In order to somewhat reduce the number of abuses in the non-state pension fund sector, changes were adopted that “weeded out” small participants by increasing the amount of initial capital and other organizational measures. A two-tier capital management system was introduced, in which top managers themselves were deprived of the opportunity to make investment decisions, but were obliged to transfer accumulated funds to management companies appointed by the Central Bank of the Russian Federation. As a result, the schemes that have been developed over decades to steal investors’ money have only improved and become more sophisticated.

Popular queries

In any case, NPF may raise questions among many Russian citizens. This is not surprising, because many do not even know that in addition to the Russian Pension Fund, we have other non-governmental organizations.

Here are some answers to the most frequently asked questions.

Is it possible to change NPF?

Yes, it's not prohibited. However, there are two conditions. Firstly, the transition takes a long time. However, you can make an early transition, then the transition will take only a year. Yes, this is also a fairly long period of time, but still less than the standard – five years. At the same time, there is a possibility that if you transfer early, part of the income on your personal account will simply disappear.

Secondly, you need to apply for an urgent transfer. If the transfer is urgent and not early, it will be accepted on December 1st. You can submit it through the branch of the Pension Fund of Russia and the State Services portal.

How to transfer money from NPF?

In order to transfer money from one fund to another, or even transfer it to the Pension Fund of the Russian Federation, you will need to write an application and then wait for confirmation of the transfer.

You can do this in two ways:

1. You can come to the nearest branch of the Russian Pension Fund and fill out a special form. You will also need to bring your passport and SNILS. You can also come to large banks with the same documents; they can also provide such a service.
2. You can contact the NPF. There you can legally demand to terminate the contract and prepare all documents for the transfer of funds.

Pension Fund or Non-State Pension Fund – which is better?

In fact, these two structures are not very different from each other. It’s just that one is state-owned and the other is not.

There are also a few other differences. For example, in an independent fund, funds from a personal account can be invested in a reliable and profitable asset. As a result, the size of pension payments will increase. The Pension Fund does not. At the same time, all invested funds in the Pension Fund will not be lost anywhere, and a non-state pension fund can declare itself bankrupt at any time. Then all the funds will simply disappear.

History of changes in the Unified State Register of Legal Entities for 2018

19.07.2018

Making changes to information about a legal entity contained in the Unified State Register of Legal Entities due to errors made by the applicant in a previously submitted application

Documentation:

• Letter dated 07/11/2018
• P14001 application for changes in information not related to changes. constituent documents (clause 2.1)
• Postal envelope
• Receipt for receipt of documents submitted by the applicant

15.06.2018

Changing information about a legal entity contained in the Unified State Register of Legal Entities

Documentation:

• Letter from the Central Bank of the Russian Federation on making an entry in the Unified State Register of Legal Entities dated May 25, 2018
• P14001 application for changes in information not related to changes. constituent documents (clause 2.1)
• Envelope dated 05/30/2018

21.03.2018

Submission of information on registration of a legal entity as an insurer in the executive body of the Social Insurance Fund of the Russian Federation

19.03.2018

Submission of information on registration of a legal entity as an insurer in the territorial body of the Pension Fund of the Russian Federation

15.03.2018

Submission of information on registration of a legal entity with the tax authority

15.03.2018

Creation of a legal entity through reorganization in the form of transformation

Documentation:

• Cover letter dated 02/16/2018
• P12001 application for the creation of a legal entity during reorganization
• Charter of the legal entity dated February 15, 2018
• Document confirming payment of state duty dated November 30, 2017
• Document confirming the submission of information to the Pension Fund dated December 18, 2017
• Copy of the decision on the issue of securities dated December 1, 2017
• Inventory dated 02/19/2018
• Envelope