Controversial pension reform in Russia

Reform of the pension system, which is considered by the Russian government needed to stimulate economic growth, risks undermining the level of flexibility of the people.


Really, after the Western countries, Russia will reform its pension system? Publication in the newspaper “Vedomosti” on 31 may of the confidential study carried out by the Ministry of economic development, implies a sharp increase in the retirement age and lower pensions. This is puzzling. “Pure fantasy, to the same socially dangerous”, — says Deputy Director of the Higher school of economy Oksana Sinyavskaya after reading different scenarios of funding until 2035.


The government, by contrast, believes that it is important to stimulate economic growth. According to the draft, the retirement age will be increased from 60 to 65 years for men and from 55 to 63 years for women. This would reduce by 23% the number of pensioners, which otherwise would increase by 5.4 million. It’s like shock therapy, officials say, will be accompanied by a fall in the replacement rate as the ratio of the level of pensions to the average wage will drop from the current 35% to 22%. In France the figure is approximately 73%.


If the medicine is in dispute, the nature of the disease is unlikely to argue. “Sooner or later have to reform. We are approaching the period, when the country’s per employee will account for one pensioner. Women, for example, approximately 35 years old at the time, as the timing of their inactive life becomes longer, up to 25 years. How you can receive a normal pension in such conditions?”, asks Evsey Gurvich, head of Economic expert group, one think tank which advises the Kremlin. As a comparison, the French civil service in 2010 consisted of 1.8 contributors per retiree.

“We can’t ask people to retire later as their pensions are miserable. For example, my pension is only an additional income,” — says Elena Lapshina, 55, who left work almost a year ago, and Shodnya sells fruits and vegetables from your garden. Without this occupation, to which she came after a failed attempt to find work in 52 years, her pension of 8 thousand 600 rubles a half left in the winter to pay heating and electricity.


“If people suffer some sort of illness, retirement they do not have anything to live”, — adds Tatiana, a teacher, is still working despite his 70 years. Only additional income to the pension in 19 thousand roubles has allowed it, in the absence of decent medical insurance to treat for many years her ailing husband.


The exit of Russia from crisis affected the incomes of families. According to Rosstat, real income fell at an annual rate of 7.6 percent in April, even more rapidly than in March (-2.5 per cent).


But this diagnosis runs the risk to undermine the legendary morale of the population. “The benefits of public Finance, which we learn from extending the active period of life, do not compensate for negative social impact for our society,” warns Boris Titov, authorized under the Russian President for human entrepreneurs and head of the “Stolypin club”, one of the two groups responsible for preparing the economic plan for the alleged fourth mandate of Vladimir Putin after 2018.

On the other hand, former Finance Minister Alexei Kudrin speaks in favor of setting the retirement age at 65 for men and 63 years for women in 2024. However, on Wednesday during a working meeting in the Kremlin extremely liberal ex-Minister did not even dare to raise the issue in the presence of Vladimir Putin, preferring to reserve their comments for the media: “Russia catastrophically loses time. Unfortunately, the authorities recognize the need for structural changes very slowly,” he said on Thursday Alexey Kudrin in interview to Agency Bloomberg.