Estonia may have to pay out Russian pensions to local residents itself
Estonia has yet to receive money from Russia meant to pay out third quarter pensions to recipients of Russian state pensions living in the country. One solution the Social Insurance Board (SKA) is now offering is the option of Estonia paying out Russian pensions from its own funds and using Russian money stuck in a bank in Belarus to pay out money to recipients of Estonian pensions in Belarus.
Sanctions imposed following Russia's launch of a full-scale invasion of Ukraine in February are hindering bank transfers between Estonia and Russia, making it difficult to fulfill a pension insurance cooperation agreement concluded with the Russian Federation as well as a social insurance agreement concluded with the Republic of Belarus.
In a letter sent to the Ministry of Finance, Ministry of Social Affairs and Ministry of Foreign Affairs, SKA Director General Maret Maripuu said that three attempts by Russia to transfer pension money to Estonia failed.
As a fourth attempt, upon SKA's proposal and with authorization from the Social Affairs Ministry, the Pension Fund of the Russian Federation (PFR) transferred €1,052,802.86 in pension money to SKA's account in Belarus' Priorbank. Nonetheless, Estonia's attempt to transfer this money to Swedbank failed.
"4,038 people living in Estonia have not received their pension in the third quarter," Maripuu acknowledged.
"We are actively seeking clarification regarding whether it's possible to transfer the money from the Belarusian bank to Estonia," she explained. "Should this nonetheless fail to work, we should use this money to pay pensions in Belarus and find the resources here to exceptionally pay out third quarter Russian pensions to the 4,038 people here."
Pension money transfers between Estonia and Russia were successful in the previous two quarters, and the money for Estonia's third quarter pension payments has likewise reached Russia.
Maripuu warned in her letter that this issue was likely to persist.
"The next transfers must be made in the next few weeks," she wrote. "We don't find it reasonable to use a Belarusian bank to fulfill a cooperation agreement between the Republic of Estonia and the Russian Federation. Pension funds for the fourth quarter must be exchanged with the Russian Federation by November 25 already. Approximately 4,400 people in Russia receive pensions paid by Estonia."
Fourth quarter pension money needs to be exchanged with Belarus by December 10 as well, the director general noted.
"We used the Priorbank solution to fulfill our agreement with the Republic of Belarus in the third quarter as they likewise couldn't transfer their pension money to Estonia," she said. "There's no certainty that further bank transfers to Belarus and Russia will work."
Another issue is the fact that, according to these agreements, pension money should be transferred in Russian and Belarusian rubles, respectively, Maripuu highlighted.
"We are requesting the positions of the Ministry of Social Affairs, Ministry of Foreign Affairs and Ministry of Finance regarding what solutions to use to avoid Estonia breaching its obligations taken under international agreements," she wrote.
According to SKA figures, 83 percent (3,330) of Russian pension recipients also received Estonian pensions in the second quarter; their average pension totaled €519. 17 percent (677), meanwhile, only received Russian pensions, averaging €79.
In mid-October, SKA communications adviser Ksenia Repson-Deforge explained to ERR that pensions are determined based not on a recipient's citizenship, but rather their length of pensionable employment in a given country.
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Editor: Aili Vahtla