A pension annuity is a contract under which an insurance company takes a person's savings and, in return, pays them a regular income for life. Russia has this product too, but it is part of a wider system of voluntary retirement savings: non-state pension funds, the long-term savings programme and endowment life insurance. Here is how each instrument works and how they differ.
How a pension is built in Russia
The Russian pension system has three tiers:
- The insurance pension. It is awarded and paid by the Social Fund of Russia (SFR, the state social insurance and pension fund) out of employers' social contributions. Its size depends on length of service and accumulated pension points.
- The funded pension. It was built up from part of the compulsory contributions for employees born in 1967 or later. Since 2014 no new contributions have been directed to it (a moratorium is in force), but the savings already accumulated continue to be invested — by the SFR or by the non-state pension fund the person has chosen.
- Voluntary savings. Whatever an individual or employer sets aside on top of the compulsory system: non-state pension provision, the long-term savings programme, life and annuity insurance.
It is the third tier that you can manage yourself — choosing the instrument, the contribution amount and the term.
Non-state pension provision (NPO)
Non-state pension provision is governed by Federal Law No. 75-FZ "On Non-State Pension Funds". An individual (or an employer on their behalf) signs a pension agreement with a fund and makes contributions, either as a lump sum or regularly. The fund invests the money and, once the pension conditions are met, starts paying a non-state pension — for life or for the period set by the agreement and the fund's pension rules.
Employers use non-state pension provision as a corporate pension scheme. Contributions under such agreements, together with contributions to long-term life insurance for employees, are deductible for corporate profit tax up to 12% of payroll costs. Non-state pension funds (NPFs) are licensed and supervised by the Bank of Russia.
The long-term savings programme (PDS)
The long-term savings programme (PDS, from the Russian "programma dolgosrochnykh sberezheniy") has been running since 1 January 2024 under Federal Law No. 299-FZ. It is operated by non-state pension funds. The main terms are:
- Term. Payments can start 15 years after the agreement is signed, or on reaching the age of 55 for women and 60 for men.
- Co-financing. The state adds up to 36,000 rubles a year to the participant's contributions. The ratio depends on average monthly income: the lower the income, the larger the state's share.
- Tax deduction. Personal income tax can be refunded on contributions of up to 400,000 rubles a year. The limit is shared by all long-term savings contributions — the PDS, non-state pension provision, type-3 individual investment accounts and, from 1 September 2026, long-term life insurance.
- Transfer of savings. Funded pension savings from the compulsory system can be transferred into the programme.
- Guarantee. Programme funds are protected by the DIA guarantee system: the participant's own contributions up to 2.8 million rubles, while transferred pension savings and state co-financing are guaranteed separately under their own rules.
- Early withdrawal. Money can be taken out early without losing investment income in special circumstances — to pay for expensive medical treatment or on the loss of a breadwinner.
PDS payments can be received for life, over a chosen period or — if the calculated lifetime payment turns out to be very small — as a lump sum.
Pension insurance and annuity insurance
Russian Law No. 4015-1 "On the Organisation of Insurance Business in the Russian Federation" lists separate classes of life insurance: pension insurance and life insurance with periodic payments (annuities). These are the direct equivalents of a pension annuity: the insurance company accepts a premium — single or in instalments — and undertakes to pay an annuity for life or for a fixed term.
How the contract works
- Accumulation period — the time during which the person pays premiums.
- Payout period — starts at the agreed age or date.
- Guaranteed period — if the insured person dies earlier, the remaining payments go to the beneficiary named in the contract.
- Frequency — monthly, quarterly or annually, as agreed in the contract.
The main advantage of a lifetime annuity is protection against longevity risk: payments do not stop even if the person lives longer than the calculations assumed. The insurer bears the longevity risk and the investment risk on the guaranteed part.
Endowment life insurance
A closely related product is endowment life insurance (NSZh in Russian): the person saves a set amount by a certain date while also being covered in case of death or disability. From 1 September 2026, contributions under life insurance contracts concluded on or after 1 January 2025 for at least 10 years count towards the long-term savings deduction (Article 219.2 of the Tax Code) — within the overall limit of 400,000 rubles a year shared with the PDS, non-state pension provision and type-3 individual investment accounts. From 1 January 2027, policyholders' rights under life insurance contracts will be protected by the DIA guarantee system (Law No. 477-FZ) in case an insurer loses its licence.
Comparing the instruments
| Instrument | Operator | State support | Lifetime payments |
|---|---|---|---|
| Non-state pension provision | Non-state pension fund | Tax incentives for employers, tax deduction for individuals | Possible under the fund's rules |
| Long-term savings programme | Non-state pension fund | Co-financing of up to 36,000 rubles a year, tax deduction, DIA guarantee | Yes, as one of the payout options |
| Pension insurance, annuity | Insurance company | Tax deduction subject to Tax Code conditions, DIA guarantee from 2027 | Yes, with a lifetime annuity |
How to choose a fund or insurer
- Check the licence in the Bank of Russia register.
- Assess financial stability and credit ratings from Russian rating agencies.
- Read the rules carefully: fees, guaranteed return, early termination terms and the surrender value.
- Bear in mind that long-term contracts terminated early often return less than was paid in.
- Remember the "cooling-off period": a voluntary insurance contract can be cancelled within 14 calendar days with the premium refunded.
Polis Re specialists can help you choose a programme and compare terms from different companies. See the life insurance section, the insurance companies directory, or submit a request for a quote.