Less reform

One of the few liberal initiatives that one could be proud of, started by the government of Mikhail Kasyanov, will be buried by the government of Mikhail Fradkov. We are talking about pension reform. German Gref announced this at the end of last week, after a meeting with the president, adding that “the decision as of today is final.” Of course, the minister did not go to the press and say: “Big, little ones, the reform is over! The government is tired of fussing with the transition to a funded pension system, Vneshtorgbank no longer wants to think about what to buy with the money of future pensioners, and the Ministry of Finance is tired of placing debt securities only so that VEB can buy them.”

The words were chosen differently, but the essence does not change. By the way, the words that escaped the minister “for today are final” (and tomorrow, therefore, revised again are possible) are not accidental. In less than five years of reform, which was initially advertised as a long process (Finance Minister Alexei Kudrin, I remember, called it a thirty-year period) process of transition from a pay-as-you-go to a funded pension system, the rules of the game have already changed several times. The deadlines were postponed, the age at which citizens were credited with part of their pension contributions to individual savings accounts was changed, the ratio in which money was distributed between the basic, insurance and savings parts of the money received by the Pension Fund of Russia (PFR) was adjusted.

All this, however, is no longer relevant. Starting next year, contributions to savings accounts will become voluntary. In other words, everything returns to the pre-reform state, when that part of the Unified Social Tax (UST) that went to the Pension Fund went to payments to current pensioners, and people who did not rely too much on the mercy of the state independently saved for old age in non-state pension funds. The only difference is that the state will add to the “volunteers” an amount equal to their annual contributions from generosity. For this purpose, the National Welfare Fund (the failed Fund for Future Generations) is specially created. Generosity, however, is not unlimited: the state will double it by no more than 10 thousand rubles a year. It is completely impossible to predict how many years this stimulus measure will last.

The cardinal difference between the procedure that is supposed to be introduced next year and the current state of affairs is that today individual savings accounts are replenished from the Unified Social Tax, which is paid by the employer, and from next year they will have to be replenished by citizens from their salaries. At the same time, no one in the government said a word about the fact that by removing the funded component from the Unified Social Tax, it (the government) would reduce the tax. So employers will not even have a formal reason to increase wages. But even if the social tax is reduced, most workers will still not receive an adequate increase in their salaries.

The government of Mikhail Kasyanov did not start the pension reform out of a good life. The demographic crisis, which will begin to develop in Russia in the coming years, will lead to a serious crisis in the distribution pension system, since the number of pensioners that each employee has to feed will seriously increase. The demographic problem, as recognized by most economists, sociologists and political scientists, is the main challenge for Russia in the current century.

The transition to a funded system, in which the main part of the labor pension is earned independently, and the distribution system operates only for categories of citizens who, due to certain circumstances, could not or did not want to earn their pension, and provides only a subsistence minimum, is the only opportunity to survive difficult times from a demographic point of view. However, the government, or rather President Putin, who put the finishing touches on the dispute over the future of the Russian pension reform, chose to curtail the reform and shift the solution to the problem onto the shoulders of his successor.