August 29, 2018, 11:37 pm / Opinions

Why Putin didn’t solve the pension problem

Presidential amendments are symptomatic treatment, not radical correction

The discussion about raising the retirement age, which has not really begun, is closed: Vladimir Putin broke the silence and in a televised address to the people supported the government’s idea to immediately raise the retirement age - but with a number of amendments, concessions and clarifications. They must demonstrate his concern for citizens and deep immersion in the problem - and in this sense they look impressive. But the bottom line is that this is more of a tactical rollback to previously prepared positions, which does not solve the strategic problems of the pension system: the project did not become a reform in the full sense of the word.

The format of the direct address to the people chosen by the Kremlin and the content of Putin’s speech leave no doubt that the president, who had long and demonstratively distanced himself from the discussion of the topic, was still monitoring the public’s reaction to the proposal to raise the retirement age by five years for men and eight years for women. The idea was met with hostility by the absolute majority of citizens - up to 90% of Russians spoke out against it, almost 3 million people signed a petition against the increase, the ratings of Putin, who initiated the government bill, and United Russia, which supported it, fell sharply and significantly.

It seems that the script for the campaign to raise the pension level initially provided for the possibility of a tactical withdrawal for the first person. The role of hackneyed accountants who pay attention only to numbers has been given to the socio-economic bloc of the government, while Putin has the usual role of a caring father of the nation, the president of all Russians, who must demonstrate philanthropy and smooth out negative social effects. This explains both the anemic nature of the parliamentary hearings and the paucity of compromise that government officials allowed in their remarks (and no substantive, Putin-level, statements from the White House were ever heard): it is not their place to care about such things, this is Putin’s personal business.

As some experts predicted, the president lowered the retirement bar for women from 63 to 60 years proposed by the government, justifying this with their special role in Russian society, which, according to Oksana Sinyavskaya, deputy director of the Institute of Social Policy at the Higher School of Economics, will reduce the planned fiscal effect of the innovation. Women make up the majority of pensioners: according to Rosstat, there are 1,412 women per 1,000 men aged 60–64 years, and 1,599 women aged 65–69 years.

Fatherly care is shown for many preferential categories: mothers of many children, villagers, miners, Chernobyl victims, indigenous peoples of the North. All pre-retirees will retain the right to benefits that were previously provided only after retirement: travel, payment of housing and communal services, property taxes, which will mitigate social discontent, says Sinyavskaya. True, regional budgets will pay for such generosity of Putin. The President also took into account warnings about the risks of job loss for people of pre-retirement age, who will be identified as a specially protected group. But the risks are supposed to be reduced not by tax benefits for employers, but by threats of administrative and criminal prosecution for the dismissal of pre-retirees. Many will probably like the round pension amount promised by 2024 – 20,000 rubles. In 2018 it looks decent, but it is not known what this money will turn into in six years.

Judging by the gingerbread cookies distributed, the main addressee of Putin’s speech is people who are already closer to the end of their working lives. But these are all tactical decisions, not strategic ones, and therefore Putin’s words can hardly reassure and reassure younger generations. In general terms, the pension system remains the same - solidary, points-based, without a funded part, in any case, the president did not consider it necessary to say, at least in the most general words, that these issues need to be thought about. The promised easing of the law does not solve the key problem of the pension system - it does not create guarantees of its self-sufficiency, the creation of a financing mechanism that does not require constant and significant subsidies from outside. It could be filled with sufficient funds by the growth and whitening of the economy, and, accordingly, by an increase in salaries and the volume of contributions from them to the Pension Fund. Putin said nothing about contributions from the self-employed and freelancers, the number of which is growing, Sinyavskaya notes. He also did not remember the security forces and the military: all people in uniform, and not just those who directly, “on the ground” protect the country and citizens, will still be able to begin receiving high departmental pensions many years earlier than all other Russians. Bureaucrats will also retain increased pensions, despite their own proposals to reduce their size as a matter of self-restraint: the loyalty of the state apparatus and security forces is more important than the obviously positive effect of reducing the privileges of “socially close ones.”

But what was not heard in the televised address will apparently never be heard again: the first person of the state closed the topic. The fall in Putin's rating will most likely be stopped by his pre-election television show in scale and healing-psychic in form. But the announced measures will only soften the blow, and meaningful reform that could improve the pension system and reduce uncertainty for young and middle generations appears to have been delayed again.-