Non-State Pension Coverage (NSPC); Provision of Care for Pensioners and Veterans

A priority of MRSK Holding’s social policy is to provide social protection for its former employees. MRSK Holding’s retirees receive benefit payments in connection with holidays, anniversaries, difficult financial circumstances, medical treatment, and the purchase of expensive medication, and are provided with other social payments.

MRSK Holding Entities continued in 2012 to carry out the non-state pension coverage (NSPC) programs (“Programs”) in accordance with the Regulations for Non-State Pension Coverage for Employees of MRSK Holding and collective bargaining agreements of SDCs.

The Programs are aimed at providing substantial living standards for MRSK Holding employees upon retirement and dealing with the following personnel issues:

• retaining highly qualified staff and recruiting employees for short-staffed positions of the Company
• developing the corporate culture and motivating employees to work efficiently
• creating favorable conditions for employees’ to fund their pension accruals.

The Programs specify pension contributions in an amount that covers the cost of fulfilling obligations to participants in the Non-State Pension Coverage Programs.

In 2012, the Company continued cooperation with the Non-State Pension Fund of the Electric Power Industry (NSPF) in the three areas described below, as part of carrying out the non-state pension coverage plan.

Corporate Plan — Support Program

Under the Corporate Plan, the Company uses its own resources to provide NSPC for specific categories of employees.

The Support Program grants the right to receive pensions in accordance with the corporate plan, providing financial incentives for:

• employees eligible for pensions;
• employees who, as a result of the reform of the state pension coverage system, are not entitled to the funded part of occupational pensions or have the limited capacity to form it.

Parity Plan

The particularity of the Parity Plan is that an employee and the Company jointly finance certain shares of employee pension coverage in accordance with certain rules. The Parity Plan applies to all persons employed by the Company.

The Parity Plan is funded from the MRSK Holding’s pension contributions together with contributions made by employees on a parity basis of 1:1. In order for the Company to pay pension contributions, employees must pay their monthly pension contributions from their own funds, at 1–5% of their official salaries, into their personal pension accounts. The employer’s contribution amount is fixed and ranges from 1% to 5% of the employee’s official salary, in accordance with the approved NSPC Regulations of MRSK Holding SDCs.

Employees are entitled to receive pension payments after their employment contracts terminate for retirement reasons.

Co-financing Program

The Co-financing Program is funded by employees, employers, and the government in accordance with Federal Act No. 56-FZ of April 30, 2008, On Additional Insurance Contributions to the Funded Part of Occupational Pensions and Government Support for the Formation of Pension Accruals.

The funds jointly accumulated by employers and employees over the period of employees’ active participation in the NSPF, together with investment income, are used to pay pensions. The NSPF accumulates the pension contributions and invests them in the market, to earn investment income and pay pensions.

The Company’s total amount of expenses for the above programs in 2012 is approximately 1.8 billion rubles.

Activities of the Company’s Veteran Organizations

Relations with veterans are a key area of the Company’s personnel policy. The priorities in this sphere include:

• strengthening ties among generations
• developing the traditions of historical succession
• providing care for veterans’ health
• providing benefit payments
• engaging veterans in dealing with production, research, and socially important issues

The electricity distribution grid sector’s veteran organization comprises over 52,000 people. Approximately 17,000 continue to work; more than 5,000 participated in the Great Patriotic War or are assigned to the category equivalent to war participants; 650 are members of the Councils of Veterans at various levels (Parent Company, IDGCs/DGCs and PUs).

In 2012, the Company paid 20 million rubles to finance activities of the Council of Electric Power Industry Veterans.

The most important areas of the joint activities of the Company and veteran organizations include:

• arranging recreational therapy for veterans at resorts
• operating membership clubs (gardening, handicraft, poetry, cookery, walking, chess, choirs, computer lessons)
• visiting recreation centers, going on excursions, etc.
• providing special benefit payments on the occasion of Victory Day, Respect for the Aged Day, Power Engineer’s Day
• mentoring (in accordance with the Regulations for Mentoring approved by many of the Company’s subsidiaries), including providing technical training for young employees, organizing advanced training courses, and holding Best Mentor contests
• carrying out the Innovative Development Program of the Company
• preserving the electric grid sector’s traditions and setting up museums and historical rooms of electric grid companies.

Providing Benefit Payments

In 2012, the annual Clean Springtime action took place: veterans’ apartments were cleaned with the participation of the Councils of Youth (Young Employees), and minor repairs were carried out to homes of Great Patriotic War veterans and those who worked in the rear. Veterans continued to be provided with subscription to regional newspapers.

Strengthening Ties Among Generations

A whole range of measures were taken in 2012 under the action plan of the electricity distribution grid sector’s Coordinating Council of Veterans both at the Parent Company level and at the level of the SDC and their branches.

The reputation of the Company and SDCs as socially responsible companies was boosted by active campaigns organized in 2012 in all 69 constituent entities of the Russian Federation and associated with the 67th anniversary of Victory in the Great Patriotic War, with forming the MRSK Holding Young Support personnel reserve, and with establishing partner relations with energy-related higher education institutions. The Coordinating Council of Veterans and the Unified Council of Youth took an active part in these campaigns.

On May 3–4, 2012, with organizational support from the Victory All-Russia Organizing Committee and DOSAAF, the 3rd stage of the Victory Banner Ceremony historical campaign and the 2nd stage of The From the Heroic Deed Homeland to the Hero’s Homeland international commemorative campaign started. The events took place with the participation of executives of SDCs and branches, veteran and youth organizations of IDGCs/DGCs, representatives of authorities of constituent entities of the Russian Federation, DOSAAF, and the mass media. In the village of Idritsa, 1,697 copies of the Victory Banner were handed for each electric grid district (currently, the Company and SDCs keep 1,807 copies of the Victory Banner).

As part of this campaign, solemn meetings took place to mark the 67th anniversary of the Victory in the Great Patriotic War; electricity distribution grid companies’ employees, their family members, schoolchildren, and representatives of public organizations and government agencies and authorities met with Great Patriotic War veterans. The Victory Banner Ceremony received corporate and regional media coverage.

In 2012, the Company continued work on commemorating 54 holders of all three classes of the Order of Glory and 28 Heroes of the Soviet Union, who worked in the electric power industry and, specifically, at the existing electric grid branches.

The electricity distribution grid sector’s Coordinating Council of Veterans cooperates with the Council of Veterans of the Russian Ministry of Energy, whose members include over 1,500 former executives of the electric power industry. Several joint events were held on the occasion of Victory Day, including laying wreaths at memorials, participating at the place of the battle in laying the foundation of the monument to power engineers and engineer troops who created a network of electrical barrier works on the outskirts of Moscow. A trip was made to the place of the site of the Battle of Stalingrad. In Volgograd, the trip participants visited the Mamaev Kurgan memorial, met employees and veterans of Volgogradenergo, decided together with the city administration to set up an electricity exhibition in the regional museum.

Engaging Veterans in Dealing with Production, Research, and Socially Important Issues

As in 2011, veteran organizations enthusiastically supported the target-oriented communications program The Electricity Distribution Grid Sector for Environmental Protection (Let’s Conserve Forest Energy). As a result, in April–May 2012, employees of the Company and SDCs in cooperation with partner organizations planted in 69 constituent entities of the Russian Federation more than 601,000 trees, seedlings, bushes, and seeds mostly bought by IDGCs; 21 parkways and 73 parks were established in socially important places (compared with more than 1 million trees, seedlings, bushes, and seeds planted by MRSK Holding employees in 2011). The all-Russia tree planting campaign in 2012 involved signing several long-term cooperation agreements between branches of the Company’s operating entities and the Forestry Committees (Departments) of constituent entities of the Russian Federation.

Veterans took an active part in two events related to the introduction into the Company’s SDCs of the methods for carrying out repairs to energized electricity networks.

On July 31–August 1, 2012, in Kamyshin, veterans from several operating entities and their branches (IDGC of South, IDGC of Centre, IDGC of Northern Caucasus), as well as representatives of the Kamyshin Technological Institute, manufacturers of electrical equipment, Tatarstan-based Grid Company, and Electric Networks of Armenia attended the first methodological meeting.

One more event—the International Scientific and Practical Seminar of the CIS Electric Power Council—took place in the same town December 4–5, 2012. The event was organized with support from the Company and the Volgograd State Technical University. Among the participants in the seminar were representatives of energy companies from Armenia, Kazakhstan, Kyrgyzstan, and Moldova; technical managers of IDGC of South, IDGC of Centre, and IDGC of Siberia; professors and teachers of the Volgograd State Technical University and the Kamyshin Technological Institute; and representatives of executive authorities of the town of Kamyshin. The event resulted in formulating detailed recommendations for the Company management, the Russian Ministry of Energy, the CIS Electric Power Council.