Western sanctions hurting Russian expat pensioners – RBK

Foreign banks are withholding money transfers from Russia, the news outlet reports

Russian pensioners living abroad are unable to withdraw their retirement payments due to Western sanctions imposed on Russia’s banking system, RBK daily reported on Thursday.

Corresponding banks in other countries are withholding funds transferred from Russia that are intended for the accounts of Russian retirees living abroad, the outlet reported, citing an explanatory note to the bill “On Amendments to Certain Legislative Acts of the Russian Federation.”

Last year, Western restrictions on Russia cut off the country’s key banks from the Belgium-based financial messaging system SWIFT, which facilitates banking transactions around the globe. A number of these lenders are also subject to blocking sanctions, which ban international financial institutions from cooperating with them.

According to RBK, the largest number of Russian pensioners, about 52,500, live in Israel. Soviet and Russian emigrants living in the Middle Eastern country were offered a choice to either receive their pensions in Russia or via cross-border transactions until the payment problem is resolved, it said.

Currently, 16,600 pensioners in Israel collect their retirement payments in Russia, another 18,300 retirees receive payments to personal accounts opened in Israel, while 17,600 are being paid under a social-security cooperation agreement between Russia and Israel, signed in 2017. The agreement allows for Russian pensioners to receive pensions using transfers in US dollars.

Read more

Although Israel has not joined Western sanctions against Russia, in practice local banks comply with the restrictions, RBK wrote, citing the document.

At present, Russian pension payments abroad are made in accordance with a government decree from 2022 which states that if pension transfers are impossible to conduct due to sanctions, payments should be suspended. Transactions could be resumed after a citizen files an application to Russia’s Social Fund with an indication of a new bank account.

The problem with transferring pensions abroad began in March 2022, the government note said. At least 37 cases of the blocking of a pension payment from Russia by a corresponding foreign bank were registered in the second quarter of 2022, the RBK report adds.

Find more stories on economy and finance in TROIB business