Will Russian pensioners be left with empty wallets?

The war in Ukraine and the sanctions against the Russian Federation remind Latvia of the more than ten thousand seniors whose pensions are paid by Russia through Latvian institutions. The total number of pensioners living on Russian pensions is higher, but some of them are paid from a special pension fund administered by the Russian side itself.

Given the sharp depreciation of the Russian ruble against the euro, Russian pensioners living in Latvia may soon receive significantly lower pensions. What should Latvia do in such a situation? Leave it to the Russian side to decide and resolve the situation, or support senior citizens and compensate for the losses caused by the crisis? This could be a difficult political decision, given that Latvia also supports sanctions against the Russian Federation for its military aggression in Ukraine.

The agreement between Latvia and Russia provides for the payment of pensions

The Latvia-Russia agreement on social security cooperation was signed by the responsible ministers of the two countries (Iveta Purne, then Minister of Welfare of Latvia, and V. Belov, Deputy Minister of Health and Social Development of the Russian Federation) in 2007 and entered into force in January 2011. It should be recalled that the road to signing such an agreement was thorny and took several years until both sides reached an agreement on how to pay pensions to pensioners living in both countries.

Under this agreement, Russian pensions are paid to almost 11,000 pensioners, or 10,992 people to be precise. However, there are still a number of seniors who receive pensions from Russia, but not through the State Social Insurance Agency of Latvia. They are paid directly from the Russian pension fund, which is not within the competence of the State Social Insurance Agency, so it is impossible to say exactly how many these pensioners there are.

The first pensions have already been paid, the next ones are under a question mark

Russian pensions are paid through the State Social Insurance Agency once a quarter. Experts from the State Social Insurance Agency tell Neatkarīgā that the amount of money needed to pay the pensions is transferred quarterly to the bank account of the other competent organization in the second month of each quarter. "Therefore, the amount of money for the payment of Russian Federation pensions for January, February and March 2022 has already been received from Russia, the conversion at the exchange rate took place on February 9," Iveta Daine, a specialist at the State Social Insurance Agency, told Neatkarīgā. The agency transfers the pension to the person's bank account in Latvia on a quarterly basis in the third month of the current quarter. So Russian pension payments for the first three months of this year will be made in March, and, as Iveta Daine explains, the pensions will be paid by March 19.

Will these pensions have already been affected by the depreciation of the Russian ruble? Probably not, but it will be reflected already in the next pension payment. Moreover, it is not yet clear what will happen to the banking system - whether the money from Russia will even be transferred in time to pay the pensions. It is too early to say.

The next Russian Federation pension payment for the second quarter of 2022 (April, May, June) is scheduled for June, but the money is due to be transferred from Russia in May. "If there are any changes regarding this payment, the State Social Insurance Agency will provide updated information," explains Iveta Daine.

Whether to pay pensions - a government decision

Welfare Minister Gatis Eglītis has said that pension recipients from Ukraine will be able to continue receiving pensions in Latvia, while receiving Russian pensions in the near future will be a challenge and could cause problems. According to the Minister, this will have to be solved in April or May. Oskars Priede, an adviser to the Minister of Welfare, confirmed to Neatkarīgā that the initial situation with Russian pensions has now been identified and the Ministry is preparing a report to be submitted to the government. The report will also describe possible scenarios regarding receiving Russian pensions in Latvia. Two issues could affect the payment of pensions: will Russia continue to transfer pensions; what will be the amount of these pensions given the value of the Russian ruble? So far, the Russian side has honored its commitments, the Minister for Welfare confirms. According to the Minister, it will be up to the government to decide on possible solutions to the situation if Russia stops paying pensions to Russian pensioners living in Latvia.

According to the State Social Insurance Agency, the pensions paid by Russia vary widely, there are both 20, 30 and 40 thousand Russian rubles, while the average pension for Russian pensioners who receive their pensions through the State Social Insurance Agency is 10,716 Russian rubles. At the current exchange rate, that is only €60.

You can get pensions from both countries if you have employment records

For Russian pension recipients living in Latvia, there is a nuance: pensioners can receive both a Russian pension and a pension for the length of employment they have worked and accumulated in Latvia. Sanita Letapura, Senior Expert at the Pension Methodological Management Department of the State Social Insurance Agency, explains that Russian citizens can claim a pension according to the terms of the agreement or to claim a pension according to Russian legislation on the basis of citizenship.

If a Russian citizen living in Latvia and reaching the pensionable age in Latvia has opted to claim a pension under the terms of the agreement, the Latvian pension is granted for periods of employment and equivalent periods in both Latvia and Russia until December 31, 1990, and for periods of insurance in Latvia after January 1, 1991. The Russian pension, on the other hand, shall be for periods of insurance in Russia after January 1, 1991, if any. However, if a person has chosen to apply for a Russian pension on the basis of citizenship, the competent Russian organization shall assess the person's insurance period up to January 1, 2002, including periods of insurance accrued outside Russia.

In addition to the Russian pension, a person may also be entitled to a Latvian old-age pension for periods of insurance in Latvia after January 1, 2002, if he or she is resident in Latvia, has reached the pensionable age in Latvia and has, after January 1, 2002, accumulated the insurance period in Latvia required for the grant of an old-age pension (which is currently at least 15 years). Therefore, as Sanita Letapura points out, there may be situations where a person living in Latvia receives not only a Russian pension but also a Latvian pension.