Putin supported pension reform. As amended

Russian President Vladimir Putin today addressed the citizens of the country with a statement on the issue of pension reform. We present the most important things said by the head of state.

Vladimir Putin: Dear citizens of Russia! Dear friends.

On June 16, 2018, the Government submitted to the State Duma a bill on changes to the pension system. On July 19, it was adopted by the country's parliament in the first reading . Its main, main task is to ensure the sustainability and financial stability of the pension system for many years to come. This means not only the preservation, but also the growth of incomes and pensions of current and future retirees.

The discussion about the need to raise the retirement age did not suddenly begin, not today. This was discussed both in the Soviet period and in the 90s. But decisions were not made and were postponed for one reason or another. The period when the next small generation entered adulthood also occurred in the mid-90s of the last century. But it was at this time that the country also faced a severe economic and social crisis, with its catastrophic consequences. This led to a second powerful demographic blow. Even fewer children were born than expected. The demographic collapse of the late 90s turned out to be comparable to the war years of 1943 and 1944 .

This means changes are necessary. In the 2000s, I was against them . I spoke about this both at closed meetings and publicly. For example, in 2005, on one of the “Direct Lines,” I directly said that there would be no such changes until the end of my presidential term. In 2008, when I left the post of President of Russia, the basic provisions of the pension system were completely preserved.

If, in those socio-economic conditions, we began to raise the retirement age, and at the expense of this, as we plan now, to increase pensions, then what would this lead to? Many families, especially in small towns and rural areas, would lose their main, and sometimes only, source of income.

As soon as we managed to generate the necessary financial resources, we directed them towards social development and the savings of our people. We began implementing long-term demographic measures, including the maternity capital program . And this gave good results, partially compensating for the demographic failures of past decades. We have overcome serious difficulties in the economy and, since 2016, have again achieved stable economic growth. Currently, the unemployment rate in Russia is the lowest since 1991. Of course, we still have a lot to do. Including in the field of healthcare and other areas that determine the quality and length of a person’s life. But the indisputable fact is that thanks to a set of measures taken by the state and, what is very important, people’s more responsible attitude towards their health, today the growth rate of life expectancy in Russia is one of the highest in the world. Over the past 15 years, life expectancy has increased by almost 8 years (7.8 years). I know that we are all not very used to trusting statistics. We draw conclusions, as a rule, from what we see in real life, around us. Some people really live a long life, but some of our loved ones and acquaintances, unfortunately, pass away very early. But here we are talking specifically about an objective assessment of the growth rate of life expectancy in Russia, confirmed by United Nations experts.

I asked the Government to seriously study and use all the constructive proposals made, including from the opposition . As for the current, current government, the easiest, simplest thing for it today is not to change anything at all. Now, despite the known difficulties, the Russian economy feels confident. The budget contains resources to replenish the Pension Fund. We will be able to continue indexing pensions on schedule for at least the next 7–10 years. But we know that the time will gradually come when the state will not have enough funds to index pensions. And then the regular payment of pensions itself may become a problem, as it already was in the 90s.

Already in 2019, the indexation of old-age pensions will be about 7 percent , which is twice as high as the predicted inflation at the end of 2018. In general, over the next six years we will be able to annually increase the old-age pension for non-working pensioners by an average of 1 thousand rubles. As a result, this will make it possible to reach an average level of pensions for non-working pensioners of 20 thousand rubles per month in 2024 . (Now, let me remind you, this is 14 thousand 144 rubles). In the future, already beyond the horizon of 2024, changes in the pension system will create a solid basis for a stable annual increase in insurance pensions above inflation.

Naturally, the question arises whether the Government has considered any other options, other reserves to ensure the sustainability of the pension system without raising the retirement age. Of course yes. Of course I did. On my instructions, the Government carried out this work until recently. All possible alternative scenarios were carefully studied and calculated. It turned out that, in fact, they do not solve anything fundamentally.

Well, look, a seemingly effective, seemingly fair measure is the introduction of a progressive income tax scale. According to the Ministry of Finance, the application of an increased tax rate, for example, 20 percent on high incomes, can give, and even then not for sure, about 75-120 billion rubles per year. These funds, at best, will last for six days . Because the daily, I want to emphasize this, the daily need for the payment of pensions in Russia is 20 billion rubles .

Another option is to sell part of the state property, for example, as some propose, all the buildings of the Pension Fund, including its regional branches. Of course, I agree, they went too far with their apartments. People are annoyed by this. And I support this too. It is estimated that the total cost of these objects is 120 billion rubles . But even if we sell them all and use the money for pensions, we can still pay them for about six days. This is also not an option.

Or, it is proposed to impose additional taxes on oil and gas companies and the fuel and energy complex . I can tell you that everything that we can collect in this way will be enough to pay pensions for a maximum of a couple of months. Moreover, this way we will put the payment of pensions, the entire pension system of the country, in an extremely vulnerable position, depending on price fluctuations on the world hydrocarbon markets. Perhaps we should make more active use of reserve funds, which are replenished from oil and gas revenues? Yes, you can do this for a while. And if tomorrow, as I already said, prices for these goods fall, which is quite possible and has already happened more than once, what then? Reserves will be depleted instantly, within a few months. People's lives, their pensions , and income for years to come cannot and should not depend on the price of oil , which changes every day.

Maybe we should continue to increase funding for the Pension Fund? Should the federal budget cover its deficit? I have already said that there are still resources for this. They really are. But look at the overall picture here. This year we are allocating 3.3 trillion rubles from the budget for these purposes, of which 1.8 trillion rubles are directly to ensure the payment of insurance pensions. If we assume that we want to achieve our goal, to achieve an average pension of 20 thousand rubles, without changing anything, then the Pension Fund deficit would increase one and a half times, to 5 trillion rubles . By comparison, this is more than all national defense and security spending.

By choosing such a solution, sooner or later we will destroy our finances, we will be forced to go into debt or print unsecured money, with all the ensuing consequences: hyperinflation and increased poverty. Without resources, we will not be able to ensure reliable security for the country. We will not be able to solve the most pressing problems: developing education and healthcare, supporting families with children, building roads and infrastructure, improving people’s quality of life. We will be doomed to lag behind other states economically and technologically. Therefore, our inaction now or the adoption of temporary “cosmetic” measures would be irresponsible and dishonest in relation to both the country and our children.

In this regard , I propose a number of measures that will make it possible to mitigate the decisions made as much as possible .

First . The draft law proposes to increase the retirement age for women by 8 years to 63 years, while for men it is raised by five years. It won't work that way, of course. This is wrong. And in our country there is a special, caring attitude towards women. We understand that they not only work at their main place of work, they, as a rule, are responsible for the entire house, caring for the family, raising children, and caring for grandchildren. The retirement age for women should not be raised more than for men . We must provide for the right to early retirement for mothers with many children. That is, if a woman has three children, she will be able to retire three years early. If there are four children - four years earlier. And for women who have 5 or more children, everything should remain as it is now; they will be able to retire at 50 years old.

Second. As already mentioned, the retirement age is expected to be raised gradually.

In this regard, I propose that citizens who were scheduled to retire under the old legislation in the next two years be given a special benefit - the right to apply for a pension six months earlier than the new retirement age.

Third. Provide additional guarantees that will protect the interests of older citizens in the labor market. Therefore, for the transition period, I propose to consider the pre-retirement age to be five years before the retirement date. Thus, I think it is necessary to establish administrative and even criminal liability for employers for dismissing workers of pre-retirement age, as well as for refusing to hire citizens because of their age. I instruct the Government to approve a special professional development program for citizens of pre-retirement age. It should start working as early as possible and be financed from the federal budget.

And if a person of pre-retirement age decides to quit on his own, voluntarily and has not yet found a new job, then in this case we must strengthen his social guarantees. In this regard, it is proposed to increase the maximum amount of unemployment benefits for citizens of pre-retirement age by more than double - from 4 thousand 900 rubles, as now, to 11 thousand 280 rubles from January 1, 2019 - and set the period of such payment to one year. It is also necessary to establish the employer’s obligation to annually provide employees of pre-retirement age with 2 days of free medical examination while maintaining their salary.

Fourth. We have already provided for the preservation of benefits for miners, workers in hot shops, chemical plants, Chernobyl victims, and a number of other categories, for indigenous peoples of the North. We must support the villagers too. It has already been repeatedly discussed and even decided on the need for a 25 percent supplement to the fixed payment of insurance pensions for non-working pensioners living in rural areas. Who have at least 30 years of experience in agriculture. I propose to start these payments from January 1, 2019.

Fifth. I believe that those who started working early should have the opportunity to retire not only based on age, but also taking into account the length of service they have earned.

The bill now establishes that the length of service that gives the right to early retirement is 40 years for women and 45 years for men. I propose to reduce the length of service that gives the right to early retirement by three years. For women up to 37 years old, and for men up to 42.

Sixth. I consider it important to preserve for the transition period, until the completion of transformations in the pension system, all federal benefits in force as of December 31, 2018. I mean benefits on real estate and land taxes.

Yes, these benefits have traditionally been provided only upon retirement. But in this case, when changes are coming to the pension system, and people were counting on these benefits, we are obliged to make an exception for them, to provide benefits not in connection with retirement, but upon reaching the appropriate age. That is, as before, women will be able to take advantage of benefits when they reach 55 years of age and men from 60 years of age. Thus, even before retirement, they will no longer pay taxes on their house, apartment, or garden plot. I know that representatives of the United Russia party in regional legislative assemblies and leaders of the constituent entities of the Federation came up with initiatives to preserve all existing regional benefits. Such as free travel on public transport, benefits for housing and communal services, for major repairs and gasification, benefits for the purchase of medicines and a number of others. I certainly support this approach.

Dear friends.

In the long term, if we show indecisiveness now, it could jeopardize the stability of society, and therefore the security of the country. We must develop. We must overcome poverty and ensure a decent life for the older generation, both current and future retirees.

The proposals that I spoke about today will be formalized as amendments and submitted to the State Duma as soon as possible. Let me emphasize once again that we have to make a difficult, difficult, but necessary decision.

I ask you to treat this with understanding.

Full version of the appeal on kremlin.ru