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Russia seeks to bypass sanctions as it sends money to its largest pensioner base, in Israel

Фото: Сергей Булкин / / Global Look Press
Фото: Сергей Булкин / / Global Look Press

Sept. 21, 2023

Russia is looking for ways to transfer pensions to Israel

The authorities confirmed the problem of paying Russian pensions abroad due to sanctions.

Due to sanctions, problems continue with the transfer of pensions to Russian pensioners living abroad. In particular, there are such problems with payments in Israel. Pensioners are encouraged to receive them in Russia

Continuing sanctions against the Russian banking system lead to the withholding of pension funds transferred by the Social Fund of Russia abroad in correspondent banks. This is stated in the explanatory note to the bill “On Amendments to Certain Legislative Acts of the Russian Federation” (RBC has this version of the explanatory note).

An RBC source familiar with the situation says that one of the largest countries in terms of the number of Russian pensioners is Israel, where there are 52.5 thousand.

According to him, Soviet and Russian emigrants living in Israel and previously receiving pensions in US dollars were notified that until the problem with payments is resolved, they can exercise the right to continue paying pensions in Russia or make cross-border transfers.

In Russia, the number of pensioners has decreased by more than 400 thousand. Currently, out of 52.5 thousand Russian pensioners in Israel, 16.6 thousand people are recipients of pensions in Russia, 18.3 thousand people receive payments to personal accounts opened in Israel, and another 17.6 thousand - according to the agreement between Russia and Israel on cooperation in the field of social security from 2017, RBC’s source cites statistics, noting that the latter are not currently paying pensions.

The Russian-Israeli agreement stipulates that pensions for Russian pensioners are transferred to Israel in US dollars. Israel as a state has not joined Western sanctions against Russia, but in practice local banks comply with the restrictions.

Currently, the payment of Russian pensions abroad is made in accordance with the government decree in force since 2022, according to which, if it is impossible due to sanctions to transfer pensions abroad in the previous manner, payments are suspended. But after the citizen writes an application to the Social Fund with new details (in a Russian or foreign bank), payments are resumed with an additional payment for the missed time.

The new bill, put up for discussion by the Ministry of Economy, provides for the extension of a number of counter-sanction measures until 2024, including the government’s right to establish the specifics of transferring pensions and other payments. The current situation with pensions makes it necessary to extend the provision of Russian citizens living abroad with the opportunity to choose the method of receiving pensions and other social payments, the department believes. Today there are two such ways: either receive them in Russia or abroad, but by transferring them in rubles to foreign bank accounts (if the bank allows you to open an account in rubles).

The problem with the transfer of pensions arose in March 2022, the explanatory note says. As RBC previously wrote , in the second quarter of 2022 there were at least 37 cases of blocking pension payments from Russia by foreign correspondent banks.

According to the Social Fund for 2022, more than 281 thousand pensioners in 132 countries received payments abroad. At the same time, 158.4 thousand of them received pensions through banks in Russia (the amount of payments in 2022 is 37.5 billion rubles), and 122.8 thousand pensioners received pensions in their country of residence by transfer abroad (expenses for such payments amounted to 12.4 billion rubles).

RBC sent requests to the Ministry of Economic Development, the Ministry of Labor and the Social Fund.