Economist Zubets revealed where the state will get the funds for the second pension indexation.
Starting next year, Russia will transition to a two-stage pension indexation system: on February 1st and April 1st. The first, a familiar indexation based on last year`s inflation, moves a month later but will retroactively include January`s increase. The second, new indexation on April 1st, will be based on wage growth rates, as announced by Russian Minister of Labor Anton Kotyakov. While a double increase is clearly beneficial for the 33 million recipients of insurance pensions, the specific size and impact of the second indexation remain unclear to many.
So, starting next year, the indexation of insurance pensions will occur in two stages: February 1st and April 1st. The first stage will see pensions indexed according to the annual inflation rate of the previous year, 2025. This mechanism is well-understood and familiar. The only difference is that the inflation-based indexation will be delayed by a month, to February 1st, but it will retroactively include the increased payments for January.
Authorities explain the change in timing by stating that official statistics bodies do not have the precise annual inflation figure by January 1st, but they will have this data by February 1st.
The main questions from pensioners concern the second indexation on April 1st. Previously, it was said that this increase would come from the Social Fund`s investment income. According to Anton Kotyakov`s statement, the concept has changed – the increase will happen due to the growth rate of wages. The authorities have already started accounting for this in the preparation of the 2026 budget.
Many analysts, including State Duma deputies, have commented on the second stage of pension increases, viewing it as an additional boost to pension payments that will serve as further financial support for veterans. However, pensioners themselves are primarily interested in the size of the April increase.
Unfortunately, both government officials and independent experts are keeping quiet about this for now. Perhaps they are maintaining intrigue, or perhaps they simply don`t know yet.
What can elderly Russians hope for if the April indexation is «tied» to wage growth in the country, which has been setting records? However, due to the cooling economy this year, many analysts predict that nominal wage growth will be around 12%, which is roughly 1.5 times lower than in 2024.
«Certain funds accumulate in the Social Fund from which payments can be made,» explains Doctor of Economic Sciences Alexey Zubets. «And raising pensions through wage growth implies an increase in insurance contributions to the Social Fund. It seems likely that these contributions will be used to conduct the indexation in April 2026.»
«But these same employer contributions will also be the basis for the February 1st indexation… What will be left for April 1st?»
«In this case, it doesn`t matter. If the Social Fund has a reserve left over from wage increases, i.e., increased insurance contributions, it will use them for the second indexation. Wage growth increases revenues to the Social Fund, giving it a real opportunity to conduct a two-stage indexation.»
«In your opinion, how much could pensions increase after April 1st, 2026?»
«Nobody knows that yet. The government likely hasn`t calculated it 9 months before the April payments. Once it becomes clear how much money has been received by the Social Fund from insurance contributions, then it will be clear how much pensions can be increased in April.»
«A lot also depends on the annual inflation rate. The Central Bank expects this figure to be around 7-8%. But some analysts predict it will be no less than 10% by the end of the year. If so, won`t the February indexation eat up the April one?»
«I believe that annual inflation will be around 8%, and funds for the second indexation will remain because wages are growing at an accelerating pace.»
«But they can`t grow at such a pace forever. Is it possible that the second indexation will be canceled in April 2027?»
«In the future, a more prolonged period of cooling for the Russian economy cannot be ruled out. But wages will continue to grow, although not at the same rates as, say, in 2023 and 2024. The minimal unemployment rate of 2.3% hasn`t disappeared. The labor shortage still persists, and employers, in pursuit of `workers,` will be forced to raise wages. I am confident that the Social Fund will have the funds to conduct the two-stage pension indexation.»
