MOSCOW, December 31. /TASS/. The law envisaging a gradual increase in the retirement age in Russia to 60 years for women and 65 years for men will come into effect on January 1, 2019. The transition period will last until 2028.

The reform of the pension system became one of the most debated legislative initiatives of the past year. The initial draft law underwent significant changes. The amendments were made after President Vladimir Putin instructed the government to soften the original version and to introduce a number of additional benefits, as well as measures to support people of pre-retirement age.

Eventually, the draft law was signed by the head of the state on October 3. It stipulates a gradual increase in the retirement age by 5 years - to 65 for men and 60 for women instead of 63, as it was initially proposed by the Cabinet. The amendments also reduce by three years the length of service that gives the right to early retirement: for men it was reduced to 42 from 45 years as it was originally planned, for women it was reduced to 37 from 40 years.

In the first several years the retirement age will be raised by six month annually. Those citizens who were to retire under the old law in the next two years will be given the right to qualify for a pension six months earlier than the new retirement age. For example, if a person, according to the new retirement age, is due to retire in January 2020, he will be able to do it already in July 2019.

The average pension in Russia in 2018 was 14,100 rubles ($202). In 2019, according to the new law, the average monthly old-age pension for non-working pensioners will increase to 15,000 rubles ($215), and by 2024 - to 20,000 rubles ($286) per month.

Right to early retirement

The new law preserves the right to early retirement for people working in harmful and dangerous conditions, for those injured as a result of radiation or man-made disasters. Also, the law secures early retirement to one of the parents or the guardian of a disabled person from childhood.

The law secures benefits for permanent residents in the Far North regions of Russia and equal areas, those who worked there as reindeer herders, fishermen and hunters. Under the new law disabled war veterans, persons with visual disabilities and other categories of disabled people are eligible to early retirement. Early retirement benefits will be given to women who gave birth to more than two children and have the experience of working in the Far North and in equal areas. The law still secures benefits for women who have given birth to five or more children and raised them up to eight years. The law also gives the right to early retirement to women with three and four children. They will be able to retire three and four years earlier than the generally established retirement age. Under the new law women who have 37 years of work experience and men who have 42 years of work experience also have the right to early retirement but not earlier than 55 years and 60 years respectively.

Expected economic effect

According to the World Bank’s report, a gradual increase in the retirement age in Russia since 2019 will add extra 0.3-0.4 percentage point to economic growth rates in 2020-2028.

"During 2020-2028, with a rise in the retirement age for both men and women, potential labor force growth is expected to increase by about 0.9 percentage point per year compared to the baseline scenario. The potential growth rate is expected to increase by 0.3-0.4 percentage point over 2020-2028," according to the report.

According to the Bank of Russia, the increase in the retirement age in Russia will lead to the growth of GDP by 0.1 percentage points in 2019 and by 0.2-0.3 percentage points in 2020-2021.

"Together with the measures on boosting human capital and mobility of workforce, the pension reform may ease the problem with the lack of personnel, which is growing due to unfavorable demographic trends," the regulator said, noting that this will ensure a steady growth in salaries.

"Given the age structure of the population, the current share of working pensioners and the dynamics of labor efficiency among the personnel of different age the hike in pension age, according to assessments of the Bank of Russia, will make an additional contribution to increasing the GDP growth rate at the level of nearly 0.1 pp in 2019 and 0.2-0.3 pp in 2020-2021," the regulator said.