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Russia’s 200,000 employed senior citizens worry they may lose old age pension

March 26, 2015, 18:44 UTC+3 Zamyatina Tamara
© ITAR-TASS/Alexander Ryimin

MOSCOW, March 26. /TASS/. Russian Labor and Social Protection Ministry’s idea of stripping employed senior citizens whose annual remuneration is one million roubles (about $16,500) or more of their old age security pension has sparked a debate in Russian society.

In the context of Russia’s modern realities one million roubles is a sum enough to buy an average class car, renovate a two-room apartment or pay for an oncological surgery. In a word, one million roubles for an employee past the retirement age is by no means a luxury, but a means of decently satisfying some basic needs apart from buying food and paying the utility bills.

The speaker of Russia’s upper house of parliament (Federation Council) Valentina Matvienko, has pointed to at least two adverse effects such a move will cause - firstly, it will fail to yield the expected effect and secondly, undermine confidence towards the authorities. For the time being the Labor Ministry’s initiative is being discussed in parliament.

Russia has 200,000 retirees who might have to brace up for the proposed measure. Russia’s average old age pension currently stands at 12,000 roubles. Striping this group of pensioners of their well-earned old age support would save the budget a tiny 30,000 billion roubles, or 0.24% of the 2015 federal budget’s expected income of 12.5 trillion roubles.

"One has an impression that the bureaucrats who have had this idea are interested in nothing but the arithmetic side of the proposal. They must have estimated the likely savings and hurried to report to the superiors about how really hard they work to take care of government money. But have they ever stopped to think about the legal, social and psychological aspects of their idea?" sociology lecturer at the Moscow State University, Yelena Shestopal has told TASS in an interview.

"I am an old age pensioner myself, but I keep working and the Labor Ministry’s measure would hit me too. My employer has for decades made deductions to the Pension Fund to support me in old age. Why should somebody else get my money?" Shestopal said.

"The psychological effects of that proposal, should it be implemented, may cause a split in society between pensioners along property lines. It would be very wrong to provoke conflict-breeding and protest sentiment the way it happened in 2005, when the government’s cash-for-benefits swap sparked a tide of angry protests," Shestopal remarks.

"It is Russia’s tradition: retirees in Russia spend the money that they have earned not on themselves but on the families of their children and on grandchildren. These days, in the context of the economic crisis personnel cuts are in progress across the nation and very many people go jobless. When the rouble slumped, thousands of young families in Russia confronted the problem of paying mortgage loans. Most retirees feel obliged to ensure their grandchildren receive good education and pay the tuition fees. Stripping senior citizens of an incentive to keep working would deal a hard blow on family values - the country’s main cultural and spiritual asset," Shestopal said. "I believe that such an unfair decision will not be made, because confidence in the authorities will dwindle," she said.

And senior lecturer at the labor and social policies chair at the presidential academy RANEPA, Anatoly Babich, sees no benefits from the Finance Ministry’s proposal.

"Economically the state will gain little, if at all, while many employed pensioners will get very upset and angry. Besides, the employees past the retirement age will lose the incentive to earn as much as they can. People should be encouraged to keep working, while setting caps on their incomes is utterly wrong," Babich said.

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