Digital ruble for pensioners in Russia

In the summer of 2023, Russia launched a third form of state currency. The digital ruble is still being tested by Russian banks and companies. More than 30 legal entities in 11 cities took part in the program. For example, in October 2023, the Moscow Metro was connected to the project – you can buy a “Troika” travel card for virtual money. The government also plans to issue pensions in digital rubles. The Central Bank realizes that the elderly will need time to get used to the innovation. In the article – what is the digital ruble for pensioners in Russia, how the new money works and how it is better than cash.

What is a digital ruble for pensioners in Russia?

In August 2023, in the Russian Federation, the basic law came into force, fixing the legal norms for the introduction of a third form of national currency. The digital ruble (CBDC) will be issued in addition to the existing money (cash, non-cash). But first the new currency will be tested in real conditions.

It will take time to test the functions. The Central Bank plans to put the monetary unit into circulation by 2025. Digital RUB will start to be used to pay for purchases, transfers (including international), transfer by will. In the future, salaries, pensions and allowances will be paid in them. The recipients will open special accounts to which the funds will be transferred.

When it will appear

Many are interested in whether pensioners will be transferred to the digital ruble after the adoption of the law on the third form of national currency. Introduce the virtual RUB money will be gradually. According to the Central Bank estimates, it will take several years for full integration. The official launch is planned for 2025. First, the possibility of settlements between individuals and companies will be opened. After that, pensions and salaries will be digitized.

The Central Bank is considering the possibility of introducing virtual settlements for all types of social payments. Specific terms have not been specified yet. The state needs to prepare the relevant regulatory and legislative framework.

Whether all pensions will be paid in digital money

Virtual money will become an alternative form of payments. The Central Bank assures: there will be no total transfer of all pensioners to digital RUB. Citizens will be able to choose in what format to receive money. Cash payments via the Russian Post and non-cash payments using Mir cards will remain.

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Transition to digital roubles

The procedure for transferring pensions to a virtual format was explained by the head of the Central Bank Elvira Nabiullina during the forum “Russia” in November 2023. The regulator intends to use the methodology tested during the implementation of the Mir national payment system. Citizens were not forced to use Russian cards. Pensioners had an alternative – to receive money through the Russian Post or in a bank. However, the authorities introduced a condition. Those wishing to receive their pensions on a card could open only Mir.

According to Elvira Nabiullina, the government plans to go the same way with CBDC. Pension will start to be transferred to the virtual account only upon the recipient’s application. If a citizen does not have an understanding of how to use the new money, they will not be forced to do so.

The Central Bank realizes that elderly people will need time to understand the tool. If a pensioner who does not know the technology receives a payment in CBDC, he or she will be able to cash it in any partner bank.

Right now, 15 financial institutions are connected to the program. This list will be growing.

Difference between conventional and digital payments

Pensions in virtual money will be credited to separate accounts. They will be opened by banks that have joined the program on the platform of the Central Bank. Virtual RUB can be used in the same way as non-cash money – to transfer money and pay for purchases.

The difference is in the more advanced protection of virtual money. Each RUB has a unique code that allows you to track the movement of funds. This makes fraudulent actions more difficult.

If attackers force a pensioner to transfer money to a fake account, law enforcers will be able to easily trace the transaction.

Another difference between virtual rubles and non-cash rubles is the technology of issuance. The former are issued by commercial banks, while the latter – only by the Central Bank. In fact, non-cash RUB are records on electronic accounts that customers own specific amounts. Banks can use them at their discretion. Virtual RUB are stored on the regulator’s servers. Commercial banks do not have access to them. Additional features of the new money and their differences from virtual money can be seen in the table.

Who will receive a digital pension in Russia in the first place

There is no talk yet of a mass transition to virtual settlements. The first to receive digital pensions will be able to clients of financial institutions connected to the program. In 2023, these are Sberbank, VTB, Alfa-Bank, Tinkoff and 9 other institutions. The list will gradually expand.