9 April 2026
The Pension and Social Insurance Fund (PSI, formerly the Pension Fund), which provides benefits to 40 million Russian pensioners, ended 2025 with a record deficit.
Fund expenses exceeded revenues by 1.239 trillion rubles, the Accounts Chamber reported in its operational report on the PSI budget execution. Compared to 2024 (369 billion rubles), the gap in the fund increased 3.4 times, and its final size more than doubled the previous records—543.7 billion rubles in 2015 and 593 billion in 2023.
The fund’s own revenue, consisting of contributions that employers deduct from each employee’s salary, increased by 12.7% to 12.412 trillion rubles. This amount, however, only covered 70% of the Fund’s expenses for pensions, benefits, and its own operations—17.596 trillion rubles.
The federal budget was supposed to compensate the Fund for the difference, but it ran into problems due to the collapse of oil and gas revenues. As a result, the annual transfer to the Fund was cut by 40%—from 5.479 to 3.186 trillion rubles. The resulting deficit was then covered by the Fund’s accumulated reserves: at the beginning of the year, this amounted to 1.936 trillion rubles, and the Fund spent two-thirds of this amount—1.218 trillion rubles.
Taking into account the Fund’s deficit and record deficits in regional budgets (1.5 trillion rubles per year), the total “hole” in Russia’s budget system reached 8.3 trillion rubles by the end of last year. Essentially, this is a disguised federal budget deficit, write MMI analysts: the Ministry of Finance has reduced transfers to off-budget funds and regions to meet the federal treasury’s deficit target of 2.6% of GDP.
Essentially, the Ministry of Finance uses the SFR budget as an additional “slush fund,” notes Janis Kluge, an expert at the German Institute for International Security Studies: during the boom years of high oil prices, the fund accumulates a surplus through transfers held in bank accounts. When the treasury dwindles, the Ministry of Finance reduces its infusions into the SFR, forcing it to draw down its reserves.
Regions and the Russian social security system are particularly sensitive to Russia’s current economic downturn, notes Kluge: “One reason for this is inflation. Social benefits are adjusted for inflation with a lag of about a year. When the economy is booming, profits and wages grow, which helps regional budgets and increases contributions to the social security system, while pension costs initially remain stable. When the economy slows, benefits catch up with the previous inflation rate, and revenues decline, leading to budget stress.”