Russia's pension reform to be adopted in first reading

Russia's pension reform to be adopted in first reading

Accounts Chamber of Russia has found several shortcomings in the government’s bill on raising the retirement age, while having no conceptual remarks to the document, according to the letter to the Chairman of the Duma Committee on Labor, Social Policy and Veterans' Affairs Yaroslav Nilov, signed by the head of the Accounts Chamber Alexei Kudrin.

"The main goal of the bill is to increase the level of pension provision for citizens," the letter says. "At the same time, the bill does not contain a mechanism to increase the size of pensions above the inflation level, which, according to the Accounts Chamber, can be improved upon consideration by the State Duma in the second reading," TASS cited the letter as saying.

The Accounts Chamber also drew attention to the fact that the draft law contains no prognosis of changes in the number of pension recipients, taking into account the May decree measures to increase life expectancy.

According to the review of the "Petersburg Politics" Fund, only 12 Russian regions refrained from public evaluation of the pension reform - Moscow, Dagestan, Chechnya, Yakutia, Kamchatka, Vladimir, Irkutsk, Kemerovo, Omsk, Orel, Yaroslavl regions and the Jewish Autonomous Region. All other subjects supported the bill. The greatest support for the reform was provided by Altai, Karelia, Mari El, Mordovia, Chuvashia, Altai and Primorsky Krai, Arkhangelsk, Kaliningrad, Kirov, Leningrad, Saratov and Tomsk regions, RBC writes

The draft bill on changes to the national pension system submitted by the government to the State Duma, stipulate a gradual increase in the retirement age to 65 for men (by 2028) and 63 for women (by 2034). The authorities plan to raise the retirement age gradually starting from 2019. Currently, the retirement age for men and women is 60 and 55 years, respectively. The hike in the retirement age does not affect current pensioners (about 46.5 mln people.) They will continue to receive their pensions and social benefits that were earmarked for them earlier. According to Prime Minister Dmitry Medvedev’s forecast, thanks to the implementation of the retirement reform, pensions will grow by about 1,000 rubles ($16) annually.

The vice-rector of the Academy of Labour and Social Relations Alexander Safonov, speaking to a correspondent of Vestnik Kavkaza, noted that the draft reform with an increase in the retirement age of 5 years for men and 8 years for women in 10 and 16 years is quite radical. "First of all, the planned total retirement age for men today exceeds the average healthy life expectancy: Russian men remain healthy for about 62 years, and according to current indicators, the likelihood of surviving to a retirement age of 65 for working men will be less than 40%. In fact, only half of the people will be retiring in those years, therefore, the economy will need to provide at least 300,000 new jobs every year. There is no answer, how and by what means they will be provided," he pointed out.

"The main problem is at the expense of what incomes people will live. There are no free vacancies in the economy. Today, this reform project means bigger risks than benefits. Yes, the budget will receive certain savings, but it will be temporary, and further the costs associated with the social security of citizens with low incomes will start increasing. Due to the inflow of additional workforce into the labor market, wages are usually not increased, inflation rises, and the purchasing power of the population declines - prompting the growth of poverty," Alexander Safonov explained.

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