Don't even dream about it: why the government refused to reduce the retirement age

Why other countries can admit their mistakes, but in our country it is impossible?

Yelena Ivanova, Natalia Seibil

The 2017 pension reform severely crippled the people's love for the Russian government. The government's and President Putin's ratings have plummeted, but they have pushed hard to send people into retirement later than many would have liked. As a result, the retirement age was raised, arguing that there is not enough money in the Pension Fund for everyone, therefore, the country cannot afford to enjoy a poor but free life with an increase in life expectancy. The citizens grumbled, but resigned themselves to their fate.

Aggravation occurs every electoral cycle. The Communist Party of the Russian Federation and A Just Russia , parties that consider themselves to be the defenders of the poor, did not leave this topic on the eve of the parliamentary elections. First, in March of this year, the communists were denied indexing the pensions of working pensioners, and after the elections, the government rejected a bill to lower the retirement age.

Academician Abel Aganbegyan calls the initiatives of Gennady Zyuganov and Sergei Mironov propaganda moves:

"The pension reform has already been carried out. The world does not know such cases; they never return to the past after a decision has been made. This is a purely propaganda move by Zyuganov and Mironov. Everyone understands that this cannot be done. If this is done, then it is necessary to reimburse unpaid pensions to everyone for whom the retirement age has already been extended. This is not a free operation, which will only further generate additional money".

The respected academician is not entirely right. There are cases of revision of the pension reform . He is right about one thing - such returns to an earlier retirement age cost money.

Two years ago, the decision to reduce the retirement age was made by the Italian government. Instead of 67 years old, now both men and women leave at 62 years old. True, there is one condition here - this rule applies to everyone who has worked for at least 38 years. The "spin the movie back" operation cost the government 12 billion euros.

In Poland, retirement for men at 65 and for women at 60 was the main election promise of the Law and Justice party, which it realized in October 2019. Prior to this, a smooth transition was envisaged at retirement from 67 years for everyone. The decision was approved by 82% of the population. The government had to pay 3 billion euros.

In France, the socialist government also returned a pension from 60 years old for those who started working at 18. For this, the French budget spends 3 billion annually.

In Russia, the authorities appeal to the fact that there is little money in the Pension Fund, therefore, the reduction of recipients of money from it is a blessing.

- The number of pensioners has decreased! Until 2028? See what the savings! - the economist Igor Nikolaev remarks sarcastically. - For us, for me, this argument demonstrates that the reform is not justified, they did it wrong. And for others, this argument is good, they hoped that the number of pensioners would decrease. And the pandemic "helped", it is not yet known how it "will help", because we see how rapidly the population of Russia is decreasing.

In January - July 2021, the country's population decreased by more than half a million people. There has not been such a rate of decline in Russia since the end of the 90s. For 2021, the decline is projected to be about 1 million.

The authorities argue that the pension system is based on principles that do not depend on how long a person will live after retirement. The insurance system is built in such a way that how much money it receives in each year, it can spend as much.

"We are generally not interested in how many people will live in the future. We are always interested in the balance of those who pay contributions to the pension fund and those who receive on the basis of these payments. What happened during the pandemic period? What has happened is that unemployment has increased. Only officially it amounted to 2 million 500 thousand. That is, the number of payers to the pension fund has decreased. Therefore, there is less money in the pension fund. There was a mutual adjustment: fewer recipients, but also fewer payers", - explains Alexander Safonov, professor of the financial university under the government of the Russian Federation, a member of the government's expert council on pension reform.

Academician Abel Aganbegyan also points out that life expectancy in the country for the pandemic has decreased by more than two years. In 2019, this figure was 73.4 years, a year later, in 2020 - 71.1. “Healthy” life has also decreased by 2 years - two years ago it was just over 63 years old, now - no more than 61 years old. Even if there is a reduction in spending on maintaining pensioners, this money should be spent on healthcare:

"During the period when we need to get out of the pandemic, when we need to reduce the colossal mortality rate in which we rank first (in terms of additional mortality per 1000 people) - at this time we need to dramatically increase healthcare spending, because we have 1 million people were in intensive care with coronavirus, health was undermined. We need to create at least 100 rehabilitation centers or clinical sanatoriums. At this time we are starting political games".

However, the Russian authorities are also playing "political games". The Communists' proposal to index pensions to working pensioners was rejected at the "distant approaches" to the elections, but on the eve of the vote, United Russia was willingly helped.

"We have adopted something else that is sparing for the budget. Despite the fact that it cost about 500 billion rubles. The well-known decision to pay 10 thousand to pensioners and 15 thousand to security officials. One-time action", - Igor Nikolayev reminds.

Such actions help not only to support the ruling party, but also to reduce social tension in the country. Since 2013, the real incomes of Russians have been declining. If such a decline is extended in time, then nothing landslide and terrible for the authorities will happen. This, in fact, was demonstrated by the past elections, says Igor Nikolayev:

"The main thing is to prevent a sharp collapse in income. We do not admit it. They are achieving their political goals - that's for sure. I think this is the way they will act. True, the path is so risky. But I think there is no such alarm now, because this year, against the background of a 3% drop last year, there may not be a formal drop at all. Perhaps a plus will show. Why worry then?"

The advocates of the pension reform and the advocates of increasing the retirement period have enough arguments in its favor. There is a shortage of labor in the labor market, and pre-retirement ages can close this gap.

“If we return the old retirement age, the likelihood that certain types of activities, especially those related to the budgetary sphere, will be exposed, is very high”, - says Professor Alexander Safonov.

Recognizing that the pension reform was negatively perceived by the population, there is also a positive aspect - within 5 years the pension will grow. Introducing new retirement ages in 2018, President Putin promised that the average pension would rise to 20,000 rubles in 2024. In June 2021, it amounted to 15 thousand 822 rubles . However, we must not forget that inflation in the country is growing, and an increase in pension by 846 rubles could not cover it. Pension growth was 5.6% , and inflation - 6.4%.

When the caravan has gone, it is not returned halfway through, recalls Alexander Safonov. It means that in the development of the new pension legislation, many laws were adopted, benefits were created for people of pre-retirement age. Now they are given tax breaks, but what will happen if everything is returned back?

Academician Aganbegyan proposes not to get hung up on the retirement age, but to give the opportunity to choose when citizens can end their labor activity:

- You can give the opportunity to retire early, at the old retirement age, women - from 55 years old, and men - from 60 years old, but with a reduced pension, especially those who are sick. This happens all over the world. In Germany, people retire, on average, three years earlier, agreeing to a lower pension.

Recovering the retirement age even in democratic France with strong trade unions and a rich history of strike movement was not easy and took a decade. This is hardly possible in our country. The problem of our authorities is that they, in principle, do not like to admit their mistakes, says Igor Nikolaev. That is why they not only will not return the retirement age, which is what the majority of the country's residents advocate, but they will not stop its gradual increase. For the government, such a decision is a sign of weakness, our government cannot allow it.

There is one more argument in favor of the decision taken now by the government. Despite the economic recovery, uncertainty is high. Skeptics call the current growth a bounce from the bottom, which was achieved during the acute phase of the pandemic. But then the death rate reached 200 people per day, and now 800 people are dying. The question is: was it really the bottom? Therefore, in conditions of uncertainty, the government has a desire to save money for a rainy day.

As for the communists and the Mironov's supporters who have joined them in this matter, for them it is a game without loss, pure profit without any responsibility. “The left leg of power,” according to the apt definition of political scientist Ilya Grashchenkov, in our system of power with a constitutional majority of United Russia, this method of protest works flawlessly, without causing any damage to anyone:

"In principle, no party is needed in parliament if any law can be passed without their knowledge. What then is the point of the position? Only in criticism. They criticize as much as they can. Next time, so many people should come and vote for the opposition that no falsifications can influence. That is, when in Russia there is not a single person who supports the United Russia. Only then will change be possible".