Russian Retirement age comes into focus
Russians enjoy one of the world's earliest retirements – 60 for men and just 55 for women.
So, despite an increase in social spending on pensions, which went up 45% this year, the government is grappling with a growing pension fund deficit, one which, officials say, the country cannot afford.
Meeting with an Italian delegation this week, Alexey Kudrin praised the country's action in cutting social spending and said that Russia should follow their policy.
“If Russia doesn't follow Italy, our debt will also rise. We have to learn from their example. We may think that if oil prices keep growing, we won’t need to cut spending – that's wrong.”
Russia’s debt is about 10% of GDP, which is much lower than in many European states. But unlike many countries’ government and private debt issues, Russia's problem is demographic.
Russia has just over 1 person of working age for every pensioner, which compares with 4 in the UK. And according to Evgeny Yasin from Higher School of Economics, this problem needs to be dealt with urgently to avoid a catastrophe.
“It’s a ticking bomb!!! And it needs to be dealt with NOW!!! In order to avoid an explosion in 20 years.”
Analysts say, if nothing is done, Russia will scare off the investment it desperately needs, with Evsey Gurvich, a head at Economic Expert Group, adding these are the fears of higher taxes, that could make Russia’s economy less attractive.
“If we don’t develop a new pension system and don’t explain how we will cover the future disbalances in our finances, long term investors would think that we may do it the easy way – by raising taxes. That would make investment projects in Russia less attractive.”
Last week Russia's President said the country could no longer tolerate an increase in the pension fund deficit, with experts in turn saying the government can do that by means of a more efficient management of pensioners' money. But for millions of Russians, there will be no escape from a longer working life.