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Using maternity capital proves complex

Maternity capital has supported numerous families in regions across the country, helping people solve their housing problems. At the same time, many people have not accessed these funds, as the programme is quite limited. Maternity capital is not very useful when buying an apartment in the city, as it does not go very far, and two other options for using it – towards children’s education or the mother’s pension – are longer-term issues, noted Elena Gorina, Senior Research Fellow at the HSE’s Institute for Social Development Studies / Center for Studies of Income and Living Standards, during the XVI April International Academic Conference at HSE.

One of the most significant ways of helping families with children is the Maternity (or Family) Capital Programme, which was launched in 2007 and has continued to be the centre of very active discussion. No one doubts the clear need for such support. For population figures to remain static, each family needs to have at least two children. The demographic dividends of programmes to support second and subsequent births were clearly justified (see the articles: Maternity capital helped ‘delayed babies’ be born, Maternity capital sparked village baby boom)

At the same time, the focus of these programmes is still the subject of fierce discussion. Accommodation, children’s education, mothers’ pensions are the most important things, but that is a woefully short list in terms of potential investment, many experts believe. This sparks the question: Does this new social measure actually work? Today, after some time has passed, we are in a position to carry out a detailed analysis of the results of this programme, and that is exactly what Elena Gorina has done in her report ‘Distributing Maternal Capital funds: General problems and regional differences.’

She studied the Russian Pension Fund’s data on Maternal Capital certificates issued since the programme launched and through to 2013, and also reviewed micro data from Rosstat selective research. This made it possible to review the intensity of maternal capital investment in 13 constituent entities of the Russian Federation (Moscow and the Moscow Region, the Bryansk, Voronezh, Vologda, Samara, Tomsk, and Amur Regions, the Krasnodar and Perm Territories, the Republics of Tatarstan, Buryatia and North Ossetia).

Some families don’t apply for a certificate

From 2007 to 2013, 4 million 822,000 people applied for and received certificates. The programme’s reach within the population as a whole can be judged by looking at the data of the selective research into incomes and participation in social programmes carried out by Rosstat in early 2012. Around a third of women (34%) who meet the formal criteria to receive funds did not apply for a maternal capital certificate, the research showed. Of those who did not apply, 45% were poor rural families (and 34.6% were poor urban families).

However, Gorina notes, the objective data is not confirmed by information on the programme’s reach: the number of people who received certificates for 2007-2013 is just 13% less than the number of people who gave birth over that period to their second or third child. ‘Nonetheless, based on sociological data, the inequality of access to maternal capital is something that deserves focused attention.’

Not applying for a certificate is not the only problem the programme faces. Elena Gorina also identified passive maternal capital recipients, the gradual loss of value of the funds and increased burden on the federal budget.

Programme conditions complicate investing the funds

The programme’s effectiveness is reduced by the deferred disposal of the funds, she stressed. Over the 2009-2013 period, 43% of maternal capital certificate holders fully disposed of their funds, and a further 3% disposed of only part of the money. Overall the peak in activity nationwide in disposing of maternal capital certificate frunds took place in 2011 and 2012. In 2013, this growth in the proportion of people who disposed of the funds fell.

Investment in housing is all that’s needed

Resolving the ‘housing issue’ is really the only option in terms of what to do with maternity capital, Elena Gorina shows. This is what virtually all the funds go toward. Paying for children’s education and contributing to maternal pensions are not in-demand options, since these are non-urgent needs.

Consequently, around 2-5% of maternity capital is invested in children’s education. In the capital, maternity (family) capital is invested more heavily in children’s education (over 5%). The expert believes this is related to the wider availability of paid services.

Capital is not always needed, even on the housing market

A series of factors limit the use of maternity capital on the housing market.

First – it is only convenient to use maternity capital in the new-build market. The existing property market, especially in major cities, is not fully open to the use of maternity capital, since alternative individuals and deals exist which are easier than waiting the two months it takes for maternity capital to be transferred.

Second, maternity capital only amounts to a significant proportion of the down-payment when buying a house in the regions and other parts of the country where house prices are more affordable. In major cities, especially in the capital, maternity capital is only one of the sources of funds in the overall purchase of a property – and usually it is not the main one.

There are, therefore, regional variations in how capital is allocated. Muscovites are the most active in using maternity capital. ‘As of the start of 2014, in Moscow and the Moscow Region, about 12.5% of recipients disposed of their maternity capital,’ Gorina said. Due to excessively high house prices and the sizable incomes of the population in the capital compared to the region, loans are more often taken out for property purchases involving maternity capital (76%). Similar figures are found in the Vologda, Samara, and Tomsk Regions (74%, 73% and 70% respectively). But these are not record-setting regions.

The stand-out leader is Tatarstank, where the proportion of housing deals involving maternity capital and loans reached 88%. This is the result of the particular institutional environment, the researcher showed, the policy of broad support for housing construction and home-buyers’ loans in the region, particularly in villages is key (the local mentality, placing a high priority on owning a house also plays a role). Thus Tatarstan is in the lead in terms of the intensity of the use of maternal capital: in early 2014, 63% of recipients had fully disposed of their certificates. In Moscow and the Moscow Region, that figure was 12.5%.

In half the regions under review (broadly, those regions where the economy is more depressed, e.g. Bryansk and Amur Regions, Buryat and North Ossetia Republics) loans are less in demand in solving housing problems with maternity capital than on average nationwide. A large proportion of deals in these regions are concluded without loans by purchase-sale agreements.

In highly rural areas (Krasnodar Territory, Buryat Republic, Voronezh Region) there is demand for the independent construction of housing (up to 13% of funds received used for improving housing).

Local peculiarities in disposal of funds

Elena Gorins studied regional nuances in the relationship between the size of the family receiving maternity credits and the number of households receiving certificates. ‘Residents of republics, particularly in the North Caucasus, are more quick to access and dispose of maternity capital funds: the number of certificates used over the four years (2010-2014) exceeds the number issues 1.3 to 1.5 fold,’ the researcher notes. ‘This reflects the particular local mentality and the emergence of shadow maternity capital schemes.’

This is in stark contrast to Moscow, St. Petersburg, and most of the Far North – where 2-5 times fewer certificates are used than are issued.

Certificates lose their value

The volume of unused certificates is established under law every year. Since 2012, the actual growth in maternity capital has been lagging behind the growth in prices. Maternity capital is essentially losing value. In absolute terms the volume of federal funds set aside for maternity capital in the federal budget continues to rise.

The active use of these maternity (family) capital funds could be triggered by expanding the range of possible uses – according to both sociologists and the families themselves, who really do need to use these funds in a wider variety of ways, the expert stressed.

Initiatives to amend the law regarding maternity funds are regularly discussed in the State Duma. Its current convocation reviewed 35 bills relating to this law. Proposals regarding new forms of spending family capital, or changing (clarifying) the conditions of its use under the current framework were most common (other ideas include changing the volume of maternity capital, expanding the programmes term, etc).

A large proportion of the bills propose additional budget expenditure to implement the programmes – either covered by increased social support or recipients, or by a changed timetable for the use of maternity capital. It is not surprising that these proposals were not adopted into law – with the exception of two changes, specifying the rules by which the funds are spent). Their opponents’ arguments were not only related to the budget size, but to the idea that the state is already funding the same areas (e.g. high-tech treatment), which had been suggested as alternative avenues for maternity capital spending.

There is little chance of seeing new approaches to spending maternity capital become law, Gorina concludes. ‘The trend will remain under which the majority of certificates issued are spent on improving housing,’ Gorina forecast. Where owners are unable to improve their housing using maternity capital certificates, they will wait an unlimited time to spend them.


Author: Olga Sobolevskaya, April 22, 2015