Economist Ivanova-Shvets spoke about further raising the retirement age in Russia

The pension reform is celebrating its first anniversary – its fifth anniversary. It was in 2018 that the retirement age in Russia increased by 5 years. In society, this innovation was met, to put it mildly, without enthusiasm. Today the estimates have changed. RANEPA analysts published the results of a sample study of the five-year pension plan – the results turned out to be a feast for the eyes. The question is: will society agree with this assessment?

The reform, launched in 2018, involves a gradual increase in the retirement age for men and women – to 65 and 60 years, respectively. The reason for this government decision was two factors: a decrease in the birth rate in the country and an increase in life expectancy.

By the way, according to Rosstat, the life expectancy of Russians in 2022, compared to 2021, has increased by a record 2.4 years. However, it should be kept in mind that in 2021 the life expectancy of our fellow citizens decreased by 1.5 years, and in 2020 by 1.8 years.

Nevertheless, the authors of the pension reform seemed to be looking into the water and knew that it was in the current period that the country would especially urgently need workers. According to RANEPA analysts, raising the retirement age added 1.7 million people to the labor market. The personnel shortage, like an opening, has been covered by our elderly citizens. At the same time, the unemployment rate among this category last year was lower than in 2018.

It is clear that if it were not for raising the retirement age, the country would have faced an even greater labor shortage, and then no guest workers would have saved us. Indeed, during the period 2018-2023, the number of old-age pensioners decreased by 2.5 million people and amounted to 34.2 million. This is the minimum for the last decade. The dependency ratio (the number of pensioners to the number of workers) also decreased – 47.9%. In general, according to RANEPA research, no matter how you look at pension reform, there is a direct benefit for the state’s economy.

But there is also another side to the coin. Many experts today, 5 years after the start of the reform, argue that the country did not receive the expected economic effect from increasing the retirement age, including in the labor market. Now, if the state had not abandoned the indexation of pensions for workers (remember, it has been frozen since 2016), then there would be not an additional 1.7 million people in the labor market today, but much more. It turns out that the state is not so much interested in labor force as in saving on payments, or more precisely, on non-payment of pensions?

Associate Professor of REU named after. Plekhanova Lyudmila Ivanova-Shvets has been working on the topic of raising the retirement age since 2004, some of her graduate students defended their Ph.D. dissertations. The conclusion is disappointing: the retirement age should increase. In the countries of the European Union it has long been increased. Working conditions in Russia have changed for the better, the number of hazardous industries has decreased… All this, combined with life expectancy and the difficult demographic situation in the country, leaves no other choice.

“The labor market has added 1.7 million people, in the current conditions this is simply a gift for the economy,” she believes.

– But not for older people…

– Some people think that the state benefited primarily from this. But I think this is a gift for all of us. If there weren’t 1.7 million people, how would the issue be resolved? By attracting migrants, processing… We can assume that everyone received an indirect benefit. 2023 is a “blank” year for retirement. During this period, we achieved the maximum increase in working-age elderly people – 700 thousand people. If there were not such a number, the deficit of the Social (former Pension) Fund would have grown even more. And it would not be possible to index old-age insurance pensions to the extent by which they will be increased in 2024 – by an average of 1.5-1.6 thousand rubles. From an economic point of view, there are many advantages.

– Then why do some experts say that the increase in the retirement age did not meet the expectations of the authorities? What were these expectations?

– We hoped for greater opportunities to replenish the Pension Fund. But in this regard there are two ways. Extensive – due to an increase in the number of employees. And intensive – thanks to the growth of salaries and deductions. We took the first path.

– But if indexation had not been removed from workers, the number of pensioners on the work shift would not have been 1.7 million people, but much more…

– This is true. If indexation had been left in place, the official level of employment of pensioners would have been much higher. After all, many have gone into the shadows so as not to lose indexation. This includes minus contributions to the budget…

– Can we hope that we will be returned to our previous retirement age?

– Definitely not. But I’m sure it won’t be increased in the next 15-20 years