The Russian central bank proposed a mechanism to regulate the financial recovery of ailing nonstate pension funds, which was developed together with the finance ministry, Vedomosti reported March 14.

Legislative amendments introducing a recovery scheme for troubled pension funds will be published for consultations in May, the newspaper reported, citing the Russian central bank's deputy head Vladimir Chistyukhin.

The proposed scheme will be similar to that used to bail out struggling lenders and insurers. The central bank will set up a pension sector consolidation fund to take over failing pension funds and will get the power to introduce measures restricting the transfer of clients to other pension funds for the duration of the recovery process. Pension funds taken over by the central bank will be also required to write off their financial obligations to management and shareholders.

Bailed-out funds, whose recovery process has been completed, will be put up for sale by the regulator, Chistyukhin said.