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23 Sep, 2021 10:42

Don't hand out cash to pensioners like communists, Russian bank chief says, insisting under capitalism elderly should pay own way

Don't hand out cash to pensioners like communists, Russian bank chief says, insisting under capitalism elderly should pay own way

Russia's top economic bosses are embroiled in a row over whether retirees should be able to count on handouts from the government, or if workers should be expected to set aside savings to cover their living expenses later in life.

Speaking to members of the Budget Committee in the country's Senate on Tuesday, the first deputy director of Russia's central bank, Sergey Shvetsov, told lawmakers that elderly people shouldn't be dependent on state funds. "Helping pensioners, in my opinion, is a bit too late," he said, insisting that "citizens should retire with a good pension package which, first and foremost, must be built up by themselves throughout their lives. This is called capitalism."

According to Shvetsov, efforts to bolster older peoples' incomes by raising the pension rate, as well as one-off sums offered up to help them with rising living costs, are a throwback to a bygone era. "When a person retires and relies entirely on the state – this is called socialism," he said. "We are closer to our Soviet past on this front, and the proposal of the Central Bank is to transform this situation through encouraging and incentivizing citizens, as well as reforming pension institutions."

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Under the Soviet system, private pension schemes generally did not exist and many of those who worked their entire lives for the state were left in a precarious position when the USSR collapsed in 1991. Since then, governments in Russia, Ukraine, Belarus and other former Soviet republics have effectively underwritten the incomes of those who have retired, with large numbers of older people facing poverty.

In a rebuke to her deputy, the chair of the central bank, Elvira Nabiullina, said that she "regrets the extremely unfortunate wording" offered up by Shvetsov. "Most of those who have already retired or are now leaving the workforce had no opportunity to save up for old age," she added, "and of course one of the priorities of the state is to guarantee a decent pension for everyone."

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According to Nabiullina, efforts to get Russians to set aside cash for themselves in later life are "in addition to the state pension system," rather than an attempt to replace it altogether.

Russian President Vladimir Putin has previously said that pensions are a "sensitive issue for a large number of our citizens," and that no options for reforming the system look appealing. In 2018, he warned that the number of pensioners could soon be equal to the number of working people, and that the system risked "going bust" unless it were subsidized through state cash reserves.

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