Decision to freeze pension funds will cost Russian economy $15.2 billion
For the second year in a row, the Russian government has decided to freeze the portion of pension contributions allocated for investment. According to the Ministry of Labor and Social Protection, these funds will be used to finance current pension payments.
Contributions for 2013, amounting to some 550 billion rubles ($15.2 billion), have already been frozen, with the government intending to do the same with a further 700 billion rubles' worth of pension savings for 2014.
The move, which the Ministry of Labor and Social Protection says is necessary in order to finance current pension payments, will leave major Russian companies without investment and will force banks to raise interest rates.
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