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Debates on higher retirement age picking pace in Russia

November 12, 2015, 20:16 UTC+3 Zamyatina Tamara
© Alexander Ryumin/TASS

MOSCOW, November 12. /TASS/. Russian authorities have to consider a higher retirement age because of the demographic situation and the shortage of resources in the national Pension Fund, experts polled by TASS said on Thursday.

Their opinions, however, were divided as regards the social indicators necessitating retirement in an older age.

For the readers’ reference, the average old age pensions in Russia totals 14,000 rubles (about $ 220) a month versus the subsistence level of 8,500 rubles ($ 132).

On Monday, Prime Minister Dmitry Medvedev confirmed the inevitability of a higher retirement age. "Longevity is growing all over the world and that’s an objective process," he said.

Discussions on raising the retirement age for both men and women by five years started quite some time ago. Ministers of the financial and economic bloc speak for a gradual increase of the pensionable age to 63 years for both men and women while the minister of the social domain object sharply to it.

At present men in Russia can retire at 60 and women, at 55.

Dr. Anatoly Vishnevsky, the director of the Demographics Institute at Moscow’s Supreme School of Economics told TASS a higher retirement age could be necessitated by affluent living or problem-ridden living likewise.

"An averaged duration of life - healthy life - in Europe exceeds 80 years now and that’s why retirement at 65 to 67 is a good thing there provided the availability of expansive guarantees, an average retiree has a chance to enjoy the hard-earned retirement for a quarter of his or her life then," Dr. Vishnevsky said

"An average lifespan in this country is slightly over 70 years old and that’s why it’s easy enough to figure out how much time will be left for senior citizens to enjoy their retirement in case the pensionable age is lifted," he said. "And add to this the not-too-high level of our medical services."

"People of intellectual professions are inclined to work longer but I wouldn’t envy those who engage in hard manual labor," Dr. Vishnevsky said.

Along with it, the expert confirmed that the current demographic situation in this country points to an ageing population and the resultant problems with social welfare standards for the pensioners.

"The numerous generations of people born after World War II reached senior age in the 2000’s and those who’re entering the working age were born in the 1990’s, the decade marked by a crisis in Russia when the birth-rate was prostrate," he said.

In other words, the correlation between the pensioners and workers now is highly disadvantageous, Dr. Vishnevsky indicated, citing the data from the Russian federal service for Statistics (Rosstat), which suggested that Russia had almost 41.4 million pensioners now, or about 30% of the population.

"The demographic tilt in Russia didn’t appear just yesterday and we were to brace ourselves for tackling it," he said. "There’s much talk around in the government concerning the importance of transition to a pensions system based on financial defined contribution, under which every worker puts away money at special accounts himself and does not depend on social security."

"The idea is simple and clear but who will guarantee the safekeeping of the accrued savings if they are eaten up by inflation or if the fund goes bust?" Dr. Vishnevsky said. "That’s totally unclear."

Dr. Mikhail Delyagin, the director of the Institute for Globalization Problems believes that to extend the retirement age in Russia along the Wester model was akin to building replicas of European airports of reed.

"An eroded system of collecting the social fees is one of the reasons pushing the government towards an increase of the pensionable age," Dr. Delyagin said. "Wealthy Russians pay less in taxes than those who have few means."

"On the face of it, more than 30 million people are working in the shadow sectors of the economy," he said.

"One more case of the pension system crisis is the absence of practical control over the means accrued in the Pension Fund, the budget deficit of which has reached 623 billion rubles or more than $ 10 billion," Dr. Delyagin went on. "Yet it’s an open secret it’s the Pension Fund that has the plushest office in Moscow, not Gazprom or Sberbank (the largest commercial bank in the country - TASS)."

"The National Affluence Fund was set up sometime in the past exactly for the purpose of making up for the deficit of the Pension Fund but the monies from the latter are spent for any randomly chosen purposes except pensions at this moment," he said.

"I’d like to cite two main arguments against the increase of the pensionable in Russia," Dr. Delyagin said. "First, this measure will take millions of jobs away from the young, which is hit by joblessness the hardest. Second, a considerable part of the male population simply won’t live through to the increased retirement age given the rather small lifespan in the country and the high mortality rate among males."

Dr. Leonid Grigoryev of the Supreme School of Economics abides by an opposite viewpoint.

"Most able-bodied Russians, men and women likewise, continue working after they reach retirement age so why should they be paid the pensions? Why do the people clutch at these meager pennies?" he said. "The Russian budget and the budgets of other countries don’t endure under such loads."

"And nowhere in the world is the bar of the pensionable age set so low," Dr. Grigoryev said.

"Let’s stop that hysteria around the Russian men who allegedly don’t live long enough after retirement because that’s wrong," he claimed. "Russian men mostly die in the age bracket of twenty to fifty years old from nonlethal guns, road accidents, and in crime-related situations."

"A total of 300,000 so-called unnecessary deaths among men occur in Russia these days and those men who get through to 55 live into their eighties without a problem afterwards, to say nothing of women," Dr. Grigoryev said.

"The Russian government should furnish society with basic information on the status of the pensions system in the country and put this problem up for public discussion," he believes. "Then there will be fewer speculations regarding the higher retirement age and therefore more understanding of the importance of this measure."

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