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Pension age can be cancelled in Russia

October 31, 2011, 13:38 UTC+3
1 pages in this article

Experts working on renovation of Russia’s long-term economic development strategy until 2020 (Strategy-2020) drafted measures that will allow to increase pensions by 16-157 percent. For this purpose citizens after reaching pension age have to agree to work from twelve months to five years without getting pensions. Such a proposal was put forward in a recently published program of the All-Russia Popular Front. Experts believe that the variant proposed by the authorities is much worse than an increase in the pension age.

The next pension reform is inevitable, the Novye Izvestia daily wrote. At least, such a conclusion can be made from officials’ recent statements. On Friday, Deputy Health and Social Development Minister Yuri Voronin said the ministry supports an initiative allowing citizens to choose their retirement age on their own. There is nothing surprising that such an idea seems productive to the ministry. According to his information, the Russian Pension Fund’s deficit will surge two-fold in 2012 to 1.75 trillion roubles.

As far as the fund’s deficit grows, the reform of the existing system is perceived as inevitability, the daily noted. The question is how to conduct it. The sounding proposals for raising the pension age have been decisively rejected by the country’s authorities. But in fact, the same thing can be done without changing the pension age. Recently the All-Russia Popular Front proposed in its program to grant Russians the right to choose their retirement age on their own. Those who will work extra three to ten years are promised high pensions. It is of no importance, where the Pension Fund that has already been bursting at the seams will take these funds: now the main thing is to lift burden from the fund and what will happen in five years – a puzzle for the future.

There are many questions set for the proposed scheme, the Rossiiskaya Gazeta daily wrote. First, it’s absolutely unclear what resources will ensure such a serious increase in pensions. For 35-40 years of the work experience a person earns a 100 percent pension making regular pension contributions. And will a person be able to increase his/her pension by 157 percent only for an extra five year work period after reaching retirement age? The cited figure is evidently overestimated, the head of the Economic Expert Group, a member of the working group on pension reform, Yevsei Gurvich, said. In such a case the pension should grow by 1.5 times and this will be ruinous for the Pension Fund.

For citizens the proposed scheme is not as advantageous as it seems at first glance, the daily continued. Real profits are lower than its authors announce. There is one more moment. This is citizens’ readiness to join such a scheme. “Many people do not believe that in five years such promises will be fulfilled and will fear that the rules of the game will change once again,” Gurvich supposed. “Until now all attempts of stimulating late retirement age have failed,” the head of the working group on pension reform and the director of the Independent Institute for Social Policy, Tatyana Maleva, said. “Under conditions of instability, high inflation, most citizens’ low awareness of the pension system and the lack of program promoting this knowledge people will believe that “a bird in the hand is worth two in the bush.” “And this is rational choice,” she said. The idea of “luring” people to a later retirement age is not new one. The legislation already contains as a minimum three norms that are designed to stimulate employee’s desire to work longer.

Strategy-2020 developers confined themselves not only to elderly people, Nezavisimaya Gazeta reported. After the elections allowances to low-income citizens will be most probably paid by means of reducing revenues of labour veterans and other subsidized categories. The strategy’s developers say following the authorities’ instructions they should find reserves within the social welfare system to overcome poverty. A member of the State Duma budget and taxes committee, Oksana Dmitriyeva, saw in the proposed scheme the authorities’ favourable method “to take away from the poor and give to beggars.”

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