Since its first day the Company has been using its corporate non-state pension benefits program that provides for financing of additional pensions at the employer’s cost. In 2004 the corporate pension system was complemented with a pension plan based on the shared financing principle.
An employee joining the participatory pension plan makes a personal pension contract with the private pension fund LUKOIL-GARANT and pays regular personal contributions for his/her future corporate pension.
By the time the employee reaches his/her retirement age, and provided that he/she retires from a LUKOIL Group Organization, the Company establishes an additional pension capital on a registered account of the employee in the Fund that would be equivalent to the sum contributed by the employee over the whole period of his/her employment with the Company.
Employees who have become members of the participatory pension plan may seek a social tax deduction in terms of the sum of contributions paid by them by submitting a tax declaration to the taxation authorities at his/her domicile or filing a respective application with the employer’s accounting department.
Registered account of the employee with PPF LUKOIL-GARANT
Pro rate contribution of the employee
Contributions made under a personal pension agreement
No limitations as to the sum of contribution apply
After the employee has retired, it can be used both for immediate payments and monthly lifetime pension payments
Grows during the saving period by means of the investment income
The funds are inheritable and fully owned by the employee
Pro rate contribution of the employer
Covers the employee’s pension contribution within his/her remuneration percentage (set by the Company’s Management Committee, currently being 4%)
Equivalent to the sum contributed by the employee him/herself over the time of employment
Made by the time the employee reaches the retirement age, and provided that he/she retires from a LUKOIL Group Organization
Payments commence following retirement of the employee from a LUKOIL Group organization and carry on for life
The Fund offers a high level of protection of the pension capitals of its clientèle. The average annual return on investment of pension reserves of the Fund between 2005 and 2015 fully compensated for the average annual inflation over the same period. By employing a well balanced investment strategy not on a single occasion did the Fund default on its obligations towards its clients, nor did it suspend payments of non-state pensions.
As of December 2015, more than 87 thousand employees (about 95% of the headcount) use the services of JSC NPF LUKOIL-GARANT (hereinafter referred to as the Fund) to have a funded component of their retirement pension. Over the previous period the Fund’s accumulated return totaled 154.28%, which is significantly higher than the accumulated return offered by the Pension Fund of Russia over the same period (115.39%). More then 40 thousand employees are members of the program, whereby the government co-finances the funded component of their retirement pensions.
Following 2015, there are 44 thousand active members of the corporate Standard Retirement Plan (over 46% of the headcount) and 41 thousand members of the Participatory Pension Plan (over 43% of the Company’s headcount). The non-state pension paid in 2015 averaged 2,100 RUB.
By employing a well balanced investment strategy not on a single occasion did the Fund default on its obligations towards its clients, nor did it suspend payments of non-state pensions. In 2015 the Fund paid a total of 1.8 bln. RUB in pensions. The equity assets of the Fund securing its obligations are worth over 280 bln. RUB.
Social support for non-working retirees
In the context of the ongoing pension reforms both the management and union committees do not sit idly by matters that involve provision of the company’s personnel with various forms of support at the time of retirement. The obligations assumed by the Group toward non-working retirees are formalized in its collective bargaining agreements. These include quarterly allowances, targeted social assistance, medical and social aid, payments on special occasions and other forms of assistance.
RUSSIAN ENTITY OF HIGH SOCIAL PERFORMANCE
At the 2001 contest “Russian Organizations of High Social Performance” the Russian Government awarded the title of the best system in Russia to the corporate non-state pension system.