Did you promise it? Do it! Authorities should index pensions on the volume of inflation

The well-known Russian economist Igor Nikolayev drew attention in his blog to an extremely important problem for many citizens of Russia and especially today - the indexation of pensions, which the authorities at one time so solemnly promised. Nikolaev writes:

“When the decision was made in 2018 to raise the retirement age, one of the arguments of the authorities was the thesis that this would allow indexing pensions at an accelerated pace, that is, the size of paid pensions would increase at a rate higher than inflation. and without raising the retirement age, judging by the soaring National Welfare Fund (13.9 trillion rubles as of October 1, 2021), there was an opportunity to increase the amount of pensions at an accelerated pace..."

At the same time, the analyst asks the question: why did the authorities so recklessly promise to index pensions above inflation in 2018? “Not only because it was necessary to come up with some kind of enticement to justify raising the retirement age. I could not have imagined that inflation would rapidly turn in the other direction. But that achievement today already seems absolutely incredible..."

And the current realities are such that it would be nice for the Russian authorities to demonstrate that they know how to fulfill their promises, because inflation is growing, and therefore the meager Russian pensions are becoming even poorer... the Bank of Russia forecast inflation will reach 7.9%. But this is not the limit, judging by its rate - 1.1% per month, so if we take into account that two months before the end of the year, the accumulated inflation, according to Rosstat data, has already reached 6.5%, then we will almost certainly end the year with more than 8% annual inflation!

At the same time, in the projects of the federal budget for the next three years, inflation is laid down at 5.8%, and since the accelerated indexation of pensions is promised, they will increase by 5.9% ... That is, it turns out that pensioners will receive almost 4% less! Indeed, given a real inflation rate of 8%, they should have budgeted at least 10% for the next years. Since the budget has not yet been adopted, the authorities have time to rectify the situation and still fulfill their promises.

In addition, Nikolaev recalls that according to the amendments to the Constitution adopted last year (Article 75), pension indexation is carried out “at least once a year”, but the truth about its size, taking into account inflation, is not said in the Basic Law. Therefore, if the authorities still underestimate pensions, they will not formally violate the Constitution. Yes, even if they violated, nothing terrible would have happened for them, because they are violating, not indexing pensions for working pensioners since 2016...

Still, it is interesting to see if the authorities will fulfill their promise?