The issue of pension reform in Russia remains the most discussed topic in Russia since the announcement of planned changes in June 2018. This is why the recent statement by Vyacheslav Volodin, Parliament’s speaker, about a possibility that there would be no government pensions at all, shocked the entire population.
“It’s a question whether there will be government pensions or not”
The shocking statement was made by Volodin during a meeting in Samara last Saturday, but discussions about what it means and should people be concerned or not are still on front pages of online and offline media outlets.
Volodin is #4 government official in the country and something that profound couldn’t be left without scrutiny.
“We have a government pension system that has a deficit, it has a hole, and it’s filled from the budget. Whether there will be government pensions or not, it’s a question, because the budget is in deficit,” Volodin stated.
But local experts disagree about the deficit in the budget, MK informed.
In fact, the government informed in May 2018 that the budget of Russia was profitable and had over 181 billion rubles in the black as the result of the first 4 months of the year. By July 2018 the profit reached 2.25 trillion rubles, which is 2.8 of the country’s GDP.
The pension fund’s budget is also in the black: It shows profit of 4.3 billion rubles.
Why such a statement by a highly ranked official?
Yulia Kalinina from MK sees 3 possible explanations:
- Volodin knows something that the Ministry of Finances doesn’t.
- He doesn’t know anything and poorly informed.
- He knows the facts very well and purposefully disperses mistruths to deceive people.
Kalinina tends to believe the second option, since variants #3 would be too horrible and #1 too unprofessional of the Ministry of Finance.
“When a journalist is doing the same — tells the society some incorrect information and makes scary conclusions — all who’s not lazy attack him. Disclaim, demand apologies, corrections, sue, complain, and request responsibility.
“But it’s a completely different thing when the speaker of the Russian Duma (parliament) does it.
“No one makes disclaimers. Nor the Prime Minister, nor the Ministry of Finance, neither the Pension Fund. Nor the Kremlin administration. Nor the colleagues in Parliament,” Kalinina complains.
Experts don’t believe that government pensions could be cancelled, according to Nikita Maslennikov who was interviewed by MK.
However, some post-Soviet republics had seen such things enacted by the rulers. In Turkmenistan some categories of seniors were not paid any pensions and had to be supported by their kids.
Volodin himself said in a later discussion that what he meant was that unless the pension age in the country lifted, then the government pensions may become impossible.
The statement quickly spread as a wild fire and if before only people aged under 55 were concerned about their prospects of getting pensions much later than they planned, now all the current army of pensioners got terrified. Maybe that was the plan? Some experts seem to think so.
Russian women in despair
The news about lifting of the age of retirement for women from 55 to 63 brought many Russian women into despair. Now they will have to work 8 years longer before they can retire.
The new order affects only the people who are about to retire and doesn’t hurt existing pensioners.
As such, for the most Russian women aged 40+ the announced reform of the system of retirement is definitely a scary one. It’s hard to find jobs for aged workers and with the new rules they may get fired before they reach 50, as the government is trying to include measures protecting employment of people reaching pre-pension age. This means that employers will probably fire them before the time they couldn’t be fired.
Even though our clients are mostly under 40, they feel helpless and concerned what future will await them. They feel it’s unfair and they cannot trust the government.
And now, with high-level statements that pensions may be cancelled completely, it will bring even more frustration and helplessness in their views of the future in Russia, especially given the fact they are single and probably don’t have kids.
Read also:
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As dire as things are, you would never know it by talking to a Russian. They don’t show their troubles like a westerner does.
I would also say, owning your apartment and children are’ the Russian pension plan. Or in other words, the West has institutionalized welfare since FDR, while the East largely relies on social networks.
Paul, you are correct. Kids help parents a lot and owning their flats helps Russians to manage even though government pensions are very low.
An interesting report would be on the economics of an American relocating to Russia to be with his Russian wife. Let’s say a 50 year old guy owns a 250k house, marries a 40 year old Russian woman, retires, sells everything and moves to Russia to be with her. He becomes a pensioner at 70, so is 250k enough for two people to live on comfortably for 20 years?
Paul, I guess it depends on what you mean by “comfortable” 🙂
Yes Elena, that is true.
If you say so! 🙂
I am an American pensioner at age 52. Since Paul’s hypothetical above is close to my intention, would you, Elena, consider doing an updated blog article on the process of becoming a temporary or permanent resident of Russia? The FMS of Russia was again dissolved in 2016 and the new Migration Authority does not yet have a working English version of their website.
Roger, we don’t plan to address this topic on EM blog. You may wish to hire someone privately to do it for you.
I believe this is a motivation for having more children and grandchildren before old age.
Robert, it may be 🙂