Pension reform: spending is saving and new poor

Economist, member of the Board of the Institute of contemporary development Yevgeny Gontmakher, like his fellow experts, does not understand why pension reform was now, and so quickly, when the conditions for them, the economic situation of the population is such that half can be classified as poor. How to live in a new reality and who has time to earn a decent old age.

Photo: Neil Moralee / Flickr

  • Pensions – why then it will be even worse
  • Raising the retirement age: early this just scared what to expect now
  • What’s wrong with raising the retirement age in Russia
  • Where does pension: what is pension formula in Russia
  • Up to 60 instead of 63 – and the more power can “sweeten” the pension reform

Statistical manipulation can show that we are not poor 13%, and 7%

– Russia – the country of the poor?

– If we imagine Russia to be optimistic, and we still live here and want our country had been prosperous, I must say that Russia has every opportunity to be the country where live successful people, where the word “poverty” may be an exception. But today’s Russia is, unfortunately, far from this ideal.

– Who can be considered poor?

– Poor people – those whom society considers poor. The approach involves the use of numbers, when income is below a certain threshold are also possible and used. But from my point of view, poverty is the subject of the public contract.

People agree among themselves that are considered poor, for example, those who have no computer because the computer in our country is already in the required set of material goods. Remember how in the late 50’s TV was considered a luxury item? Then it became commonplace, and people who had black and white TV, were poor. Then came the turn of color TVs, washing machines, dishwashers, car to some extent, of computer. From this point of view, Russia is a country where many people are deprived of what is considered sort of available.

Evgeny Gontmakher. Photo: Tatyana von Wardenburg / Facebook

– The President instructed the government to reduce poverty by half until 2024. How is that possible?

– On the one hand, the order of the President is easy to perform, because the statistical manipulation may allow to report that we have these people not 13% and 7%. Statistics in this respect can be very hard to succeed. But that does not resolve the real trouble.

The President was referring to in his decree poverty, which is considered the subsistence level. We have about 13% of people have incomes below this figure. And so poverty is, of course, be measured, but not enough. Moreover, the living wage was introduced in 1992 I participated – as a feature of physiological. There was a sharp social situation, incomes have fallen, many people found themselves in a difficult position, and among the mass of poor people in Russia need to identify the poorest, who did survive in the literal sense of the word, to help them. This feature of physiological survival, but it is an inadequate understanding of poverty. As I said, from the point of view of the society in Russia to the poor half of the population.

– Adopted a pension reform could trigger a new wave of “impoverishment” of the population?

– In General, no. Pensions will be paid and will be indexed – promised average of 1,000 rubles per year. It is not very much, and pensions in General small, but the deterioration of the situation model of a pensioner I can not wait. While it is true there are some groups of the population, they are relatively small, this so-called people close to retirement age, which increased the risk of falling into poverty, even formal, that is, below the subsistence level.

I’m talking about a situation where, for example, a woman 52-53 years, it is expected that 55 will receive a small pension, to earn and to survive. And now the retirement age is extended, and it turns out that this whole category of women as well as men, deprived of pensions and remains on small salaries. But it’s not such large groups of the population – several hundred thousand people. In addition, not all individuals approaching retirement age will be among the poor: people living in families where someone earns a good idea, not even getting pension, you still on the payroll more or less decent lives.

Photo: Pedro Ribeiro Simões / Flickr

The government does not live long horizons in 30-35 years

– The President said that the budget will not benefit from pension reform. What, then, was all this made?

– The goal is to save money and some of the pressure off the Federal budget, which is really several trillion rubles each year and sends to the Pension Fund as a subsidy, I did not see, not see, and the President confirmed it.

What other possible purpose I do not understand. It was known, and the authors of the reform, too, that the population is sharply negative to this proposal. Conducted surveys – 80-90% have always been against raising the retirement age. And however it went.

A little hard to believe that the authors of the reform think about the long-term prospects of 30-35 years, because our government does not live such long horizons. The logic is clear: now I am a Minister or Prime Minister, then I will not well, what I think about the times when I’m not there.

I’m not one to see the goals of the reform. All my colleagues-experts questioned the “why”question.

 

And needed reform of the pension system in principle? Was there some other, less painful for population options?

– You know, pension reform is not done by itself. In parallel, it is necessary to change the institutions that are associated with it, such as financial markets, change and motivate people so that they themselves were involved, to invest their money. In the end, the economy should be changed, to grow wages. Against this background, it is possible to do normal pension reform, and the right conditions for her there.

First, it is not necessary to put the main purpose to relieve the budget. This immediately drives into the trap that such unpopular and incomprehensible decisions, which obviously are only negative and, moreover, produce the opposite result. We remember how it was with the monetization of benefits: I wanted to save, and got large costs.

Secondly, it is necessary to proceed from the fact that pension reform – the case for decades, and not, as wemay, it was announced, and January 1, reform will begin. It is necessary to have patience. We, the government works according to the scheme: today potatoes planted and dug up tomorrow, because I want to eat. We started a good pension reform 2002, we had to endure, maybe something to adjust on the move, and then she would give the fruits regardless of the demography and increase of pensions in 15-20 years.

Thirdly, it is now necessary to offer a different pension system for different age categories.

We understand that for current retirees, no system developed can not be, they just need to pay pensions, increasing them as the opportunities that exist in the state.

For middle-aged people who left before retirement 10-15 years should be the middle scheme between the cumulative and joint parts.

But there are very young people 20-25 years who are just entering into working age. They should be offered a funded system, which partially was launched in 2002, but then frozen and, in fact, ditched. It must be such a system, when fee, which is paid either by them or the employer for them, as in Russia, nearly all would go to their personal accounts. Yes, a small part of the departed would be on the solidarity of generations – the current seniors need to pay something, but most of the contribution would amount to pension deposits, designed for 30-50 years. These deposits could be opened in banks and insurance companies, and pension funds.

Yes, the government should engage in financial markets that the money will not just lay and be outpaced by inflation, and were invested. It’s a whole big thing that needs to be addressed, the whole world so lives.

When these young people in 30-40 years would be retired, they would be offered absolutely an effective pension system, which, if any demographic would give a decent pension.

In addition, it is necessary to abolish the upper earnings from which is taken the contribution to the pension system, is actually canceled, then the maximum pension. I think it is a relic.

– What is the maximum size of pensions?

– If you are the part of the working lives (because for people older scheme of calculating pensions is more complicated, because someone has the experience), there is an upper limit of earnings from which payment is taken. It is now about a million rubles a year. That is, if you earn two million per year, with a million take the contribution to the Pension Fund, and in the second already there.

This million per year is considered to be very easy. However, all this is distorted by the scoring system, factors that still going to cancel, I hope, because it strongly suggests fog. Now cash that is your contribution count by a special formula, translate into the so-called pension points, and the value of these points each year is established by the government. Therefore, the government fully manages your retirement, you are almost can not do anything.

But if we assume that these scores are not, your money is directly transferred to the Pension Fund and there add up, you can calculate 22% of that million 220 thousand roubles you pay into the Pension Fund annually; for example, 40 years you will receive a million rubles, which is actually unlikely; the amount of accumulated money you divide by the number of years of survival – there is a factor of how much your generation will live after retirement; and roughly speaking, this amount is now getting 14-15 thousand rubles a month. This is a very small pension.

Pensions will rise to 20 thousand – and maybe inflation will be in double digits

– What are the General implications of the reforms and when they will be felt by the population? Maybe you already have some calculations?

– There will be overheads, and I think decent. Apparently, several hundred billion rubles will be spent additionally.

Promise that average pension will increase to 20 thousand by 2024. Here I was worried by the fact that figures are given in absolute terms, and may, inflation in 2-3 years will be in double digits again? So I would place those who have offered these schemes, said pensions will be indexed to the inflation rate plus 10 percentage points. It would be fair and understandable.

But simply to say that 6 thousand rubles will increase the average pension – well, we do not know what will be 6 thousand roubles in 2024 and that it will be possible to buy.

Photo: Pedro Ribeiro Simões / Flickr

Plus these additional 6 thousand is not money, which are contributions, not the insurance Supplement, and the net subsidy from the Federal budget, what the President said – the additional costs. It is a classic manual control. The pension system formally, we have insurance, and the amount of the pension is determined on the basis of how much the Pension Fund. Yes, the Federal budget supports it, but this support more and more in respect of own revenues of the Pension Fund.

So, the scheme is as follows: how much the state will throw, so the pension will grow. Our pension is essentially already lost the nature of insurance, it is actually the allowance is paid from means of the Federal budget.

Which is too bad, because the ideal pension system and insurance. You pay a premium, as the insurance company, and upon the occurrence of the insured event, i.e. when you have reached a certain age and can no longer work, from what you gave, from your own contributions you paid what you can live with.

With regard to the consequences for the population: as I said, some groups close to retirement age may fall into poverty, these people will have problems with employment, because the economy is poorly developed and does not create new jobs.

But the radical collapse of economic and financial consequences will be.

– Where will the money in the budget for extras? The tax increase?

Yes, that’s VAT, for example, has increased recently.

The budget is a common Treasury, where the money is unmarked. The policy is that the President dictates to the government what government funding priorities. I do not exclude that at some stage I can say that the section “Social policy”, and this is mainly contributions to the Pension Fund, is not a priority for funding, and, for example, will be less to transfer money. Then the Pension Fund will start on something to save.

Now, see, save on that index pensions to working pensioners. It is a violation of the same insurance principles, and it’s unfair. Each year August 1 of the pensions recalculated based on how much for a working pensioner was paid for last year. So, the maximum amount possible this year for conversion – 200 roubles. You get 14 thousand rubles pension, you worked hard all year for the white salary, you pay contributions, you pay taxes and you 200 rubles increased the pension. That’s the economy now is.

I think that will be invented more tricks to reduce subsidies from the budget, and all this is due to the fact that they would be infringed by some categories of pensioners.

– Nevertheless are those new realities in which we all have to live. The question is how: to save, to learn, to give birth to five children, to prematurely retire, when talking about women?

– For those who are younger, and for any age in General, I believe it is crucial to take care of your health and not wait until something serious happens, and to run to our free medicine. It is important to lead a healthy lifestyle, to constantly learn, not to be lazy. It’s not that common phrase. Have your friends doctors, I always ask: “Dear doctor, do you speak English do you read?” Many wonder: “why?” Well, we understand that a doctor twice a week should go to the English site and learn about everything new that his area is, otherwise how can he be a modern doctor?

This applies to all professions. Do not assume that if you got your degree, even about a very good higher education, it’ll last you a lifetime. According to research, the salary of highly qualified specialists is growing to 45, and then gradually falls because the people behind the new things that is happening in their area.

General, the only recipe that can be to take care of yourself, in terms of health and education, about their children, if they are, that they are healthy, well educated, never sat on the neck of you when you become adults, and maybe helped you.

About where and how to invest money to be a more difficult. Here everything is changing rapidly. Was once profitable investments in real estate, now in Russia the period when it is not very profitable, but profitable to invest in currency and who knows what will happen in a year or two. An educated man should monitor and change tactics on the go, and why it is necessary to constantly raise the level of education and be placed in the information field, to understand what is happening in Russia and the world.

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