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Pension in Russia to grow to RUB 24,000 by 2023

October 20, 2012, 21:35 UTC+3

But “if we do not do something now, the situation will keep getting worse”, Deputy Prime Minister Olga Golodets said

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PETROPAVLOVSK KAMCHATSKY, October 20 (Itar-Tass) — The average pension in Russia will grow to 24,000 roubles by 2023, Deputy Prime Minister Olga Golodets said.

The current pension of 9,700 roubles may be assessed differently in different regions of the country, including as “socially acceptable”, but “if we do not do something now, the situation will keep getting worse” and the pension will grow to a mere 14,000 roubles by 2023, Golodets said in an interview with Sergei Brilev’s Vesti v Subbotu (News on Saturday) TV programme on October 20.

“Today, due to historical reasons and due to the time when the pension system was formed, it reflects all the upheavals our country went through in the post-Soviet period and today no person in Russia can calculate his pension as the pension is hard to understand, it is not transparent and it is not clear what it depends on,” she said.

“There must be a simple and clear system,” Golodet stressed, recalling that in the Soviet Union people knew exactly how big their pension would be.

“We must make the pension system and the pension plan simple, clear and depending on concrete tax payment in the interests of an employee and the period of time during which such payments were made,” she said.

Speaking of the length of employment required for full pension, Golodets said that after long discussions it has been set at 35 years.

President Vladimir Putin asked Golodets earlier to think about how to reduce the required length of service for retirement from 40 to 35 years.

“This is a more balanced approach from the social point of view,” Golodets replied.

When asked about the size of pensions, she said, “There are 87 million able-bodied people in the country but only 48 million pay taxes. If at least another 15 million start paying taxes, we will solve the problem of raising pensions and making them decent.”

Having noted that this is a part of the Pension Strategy, Golodets said: “We show through pension reform where the money will come from.”

“First, we will cover those employers who do not pay taxes for their employees now. By so doing they deceive the state several times: they deceive the employee who has no pension being formed, and they deceive other employers who have to pay pensions twice,” Golodets said.

As an example, she mentioned notaries and lawyers who pay 14,300 roubles a year, not 112,000 roubles as other employers do. “Today our society, our coalminers basically support the pensioner parents of the notaries and lawyers who do not pay taxes for themselves,” Golodets said.

She said the pension reform strategy would be amended before November 1.

“We will amend the strategy before November 1. It should be approved by the government. We hope to be able to do before the end of this year,” she said.

The Labour Ministry has submitted the pension system development strategy up to 2030 to the government.

“The strategy sets out social priorities and benchmarks up to 2030 as well as mechanisms for state policy in the field of pension insurance in certain stages of its implementation,” the ministry said required.

The document aims to develop a three-tier pension system for groups of people with different incomes. “It also preserves the base pension - guaranteed pension based on the principles of social insurance and guaranteeing a socially acceptable level of pension for all people, subject to long-term financial stability of the pension system,” the ministry said.

The mechanism for managing the pension system's deficit should be devised by 2030. It will keep the deficit at no more than 0.9 percent of GDP and seek to reduce it further.

Besides, the pension to subsistence level ratio will have to be raised to three minimums. And pensions will amount to 40 percent of the salary for people who have worked the required number of years for that.

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