July 05, 2018

Russia to raise pension age

Russia to raise pension age

The Russian government is planning to raise the state pension age to counteract the effects of the country’s aging population.

The proposal to raise the pension age from 60 to 65 for men, and from 55 to 63 for women, has resulted in protests in 30 Russian cities. Unions are resistant to the plans, stating that many people may not live long enough to claim a pension if the thresholds are increased. According to the World Health Organization (WHO) the life expectancy of Russian men is 66 and for Russian women is 77.

Since the early 1990s, Russia’s population has been declining. A low birth rate coupled with an aging population is causing the country’s workforce to shrink. Furthermore, President Putin has implemented a bill on pension spending, foreseeing a 265billion roubles deficit ($4.2billion) in 2018.

“The institutional structure of pension systems should follow population developments,” writes IZA author Marek Gora. “[Pension systems] are kept solvent by increasing redistributions from the shrinking working-age population to retirees. A simple transparent structure and individualization of pension system participation are the key preconditions for an intergenerationally just old-age security system.”

The reforms will come into full effect in 2028 for men and 2034 for women. Russian economists, Ilya Kashnitsky and Vladimir Kozlov from Moscow’s Higher School of the Economy, question why the plans have not been implemented earlier, stating: “Putting off an unpopular but inevitable measure…shows an unforgivable lack of seriousness by the government.”

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