Russian Pension Reform

RUSSIAN REFORM OF PENSIONS

By Stephen Wilson

 

MOSCOW -  During the 18th century, the legendary Frederick the Great was obsessed with

building the best army in Europe. He strove to turn Prussia into the greatest

military power in Europe. Investing so much money into the military he became

notoriously mean. He was so stingy he never bought a new overcoat. And most

of his older soldiers did not receive a pension. So they were reduced to begging

in the streets. They came back to haunt him. Whenever he entered a new

town they converged on him asking for money. If he was in a good mood, he

would toss them a coin as if throwing a bone to a dog. But if he was in a foul

mood he roared to his guards: "Drive the scum away!"

Russia is not Prussia. However, the public declaration and the way that

Russian pension reform is being implemented in Russia indicates not only

contempt for ordinary Russians, but a failure to distinguish Russia from Europe.

For instance, Russians die faster than the majority of people in Western Europe,

their pensions are far lower and it is not uncommon to confront pensioners

begging all round Moscow. If they are not selling things they can be seen lining

the streets selling flowers grown from their dachas or fruit. Svetlana Wilson

stated: "I saw this frail woman selling this tattered undergarment which I

realized nobody would buy. So I just decided to purchase it."

Prime Minister Dmitri Medvedev declared that the retirement age would

be increased from 60 to 65 for men by 2020, and 55 to 63 for woman by 2034.

The government justifies their proposals on the old grounds that the ratio of

working people to retired has drastically decreased. Whereas in the 1950's

there were five able bodied men to one pensioner, now there are just a bit more

than two able bodied men. The government has less money to sustain the current

system. They also argue that since life expectancy has increased to 71.3,

there are now far more older people to take care of. The Prime Minister has

attempted to reassure anxious aging people that special labor exchanges will

be established to either retrain or offer them work. But how the mortality rate

suddenly jumped from 59 in 2010 to 71.3 in 2018 remains a mystery!

Those proposals are not new. In 2010, the then finance minister Alexei Kudrin attempted

to implement later retirement plans to 'balance the books'. But the proposals

were withdrawn following outrage and mass protests. And again, the Russian

government is facing mass demonstrations all over Russia that threaten

social disorder. Most Russians are indignant . This is indicated by a petition

against reforms which got 2.6 million signatures. An artist Svetlana Wilson

who receives a pension of 14,000 rubles stated: "The government do not

understand that Russia is not Western Europe. The quality of life here is very

bad. We have low wages, poor medical care and most men die around

the age of 65. I can't imagine anyone who is in favor of those reforms. We

don't have manufacturing industry . The factory where my mother built planes

for many years has closed down." 

The Institute of Economics claims that as many as 18% of men would die before they got their pension. This seems a gross underestimate . Yelena Boyko, an accountant stated: "I think this is an attack on people. I'm angry. The Russian government has been wasting

money on the Olympic games, the World Cup, renovating parks in Moscow,

and financing a war in Syria. They should be improving the pay of teachers,

doctors and retired people. Yet Putin travels around in an expensive jet plane

while the Prime Minister of Croatia just came on an ordinary plane without

V.I.P. status. Who do you think pays for all the luxury travel and feasts he

enjoys? Ordinary Russians pay for this out of their own income via tax."

What infuriates some Russians even more is the fact many politicians and

professions enjoy a relatively early retirement age. The retirement age for

the Federal Service Bureau is 35, and politicians 45. A member of the Russian

parliament can obtain a handsome sum of 63,500 rubles a month. This sum is

three to five times the average pension who usually acquires 14,500 rubles a

month. A manager called Dmitri told me: " Not everyone gets the same pension.

It varies a lot. My grandmother who receives 14,000 rubles, at 74, has to teach

two students a day at her apartment. Yelena Boyko stated: "My mother worked

for 40 years but only gets 14,000 rubles a month. It is insulting."

However, some teachers have even claimed the reforms might actually lead

to greater protection for the jobs of some teachers. This is because some

teachers at institutes have been forced to retire even when they don't want to.

Oksana Chebotareva stated: "Some teachers would welcome having their

work extended as retirement age represents a pretext for dismissing them. Some

teachers don't look forward to getting a pension which is a lower than their

existing wages." Some younger people stated that reaching retirement age

can represent a death sentence. They can lose their main sense of purpose in

life by retirement as work offers them a structured routine and the company of

colleagues.

It is important to note that the new pension reforms will not only be a blow against

the old but their children and grandchildren. Grandparents play a vital role in

looking after their grandchildren allowing parents to go out and work. This is

very important for divorced or single woman who would be unable to cope with

juggling their work schedule with domestic obligations. However, it seems unlikely

that there will be jobs available for people in the provinces. If companies are

highly reluctant to employ people at forty or fifty, it is doubtful they will employ

people at 60. In some rural villages there is no work for young people, never

mind old! The rate of unemployment in Russia has long been underestimated.

But it is instructive to visit a local graveyard in some towns. There you will find

the graves of people who died in their thirties and forties from alcohol, drugs, and

stress of all kinds. They died from what we call the despair diseases.

The Russian language does not appear to have a word for retirement as we

understand this in Europe. They tend to say, "Go on the pension." With the

new reforms they won't be going on the pension but the pension will be

running away from them. It will be like a phantom pension. You can see it but

you can never catch or touch it. It is not tangible.

What is especially traumatic about those new reforms is that while in Soviet

times Russians received free education, medical care and pensions, now they

are losing a third sacred cow. That is, they have no right to free education, free

medical care and even a modest pension. But you can at least turn into a ghost

or shade which haunts graveyards.