Named the reasons for the unprecedented loss of working pensioners

Older people leave for the sake of indexation of insurance pensions

At the end of last year, pensioners in Russia decreased significantly: unemployed – by 372.3 thousand people, employed – by 600 thousand. The situation with the second category is striking: nothing like this has happened in the country for many years. Experts attribute this to two main circumstances – the gradual increase in the retirement age and the increasingly painful uncertainty in the economy.

As of January 1, 2023, the total number of pensioners registered with the Social Fund of Russia (SFR, formed as a result of the merger of the Pension Fund and the Social Insurance Fund) amounted to 41.78 million people. Of these, 7.9 million are employed. The average old-age insurance pension increased to 20.6 thousand rubles, that is, by 14% compared to last year’s figure.

The gap between the pensions of working and non-working pensioners has reached almost 6 thousand rubles (in favor of the latter) against 4.4 thousand a year ago, follows from updated data from the Unified Interdepartmental Information and Statistical System (EMISS).

The reduction in the number of working pensioners by 600,000 cannot be explained only by mortality, a pandemic, or an increase in the retirement age. Some of them quit their jobs in order to pull off a scheme – to wait after the dismissal for a full-fledged indexation of their pensions and then return to their jobs in a different, more protected social status.

As you know, pensions for working pensioners are not indexed to inflation, this category is only entitled to an annual (since August 1) increase of three pension points, approximately 250 rubles.

“There is absolutely nothing unexpected in the fact that last year the total number of pensioners decreased,” says Sergey Smirnov, a leading researcher at INION RAS. – The reason lies on the surface – raising the retirement age under the 2018 bill: those citizens who were entitled to payments in 2022 under the old legislation did not receive state labor pensions. Plus, mortality also affected, but it does not go beyond the standard values.

Much more important is the situation with the unprecedented loss of working pensioners. There is no need to go far for an explanation here either: the whole point is in general economic uncertainty, in a drop in living standards and real incomes. A lot of people decided to “go into reserve”, change their status and, as non-working pensioners, receive the indexation they are entitled to by law. And – for all the years from the date of registration of the old-age labor pension, in fact, retroactively.

Well, then, Smirnov argues, these people will follow the development of events and seek employers to take them back. So the statistic of a loss of 600 thousand people is in itself extremely heterogeneous, if you look closely.

“The pension reform eventually led to the fact that fewer citizens are starting to retire, while some potential pensioners die before reaching the age specified by law,” says Pavel Kudyukin, a member of the Council of the Russian Confederation of Labor. – As for the increase in the amount of payments on average per year, it does not compensate for the real increase in the cost of the pensioner’s consumer basket. It is impossible to maintain the previous level of consumption, we have to give up something, in particular, to buy products at lower prices and of the appropriate quality.”

Kudyukin believes that the main pain point of the Russian pension system is the chronic budget deficit of the Pension Fund, now the SFR. This “pot” cannot be filled with standard insurance contributions from payroll funds and payments under civil law contracts (GPC): in any case, it continues to depend on transfers from the federal budget. The situation is also affected by the high level of shadow employment: too many people in the country do not transfer a penny to the state pension “cauldron”.

As for the situation with working pensioners who are forced to change their status due to the lack of indexation, this situation still seems unfair to experts. “According to the amendments that were adopted more than two years ago, in our Constitution there is no distinction between unemployed and working pensioners, whose salaries are also deducted to the Social Fund,” recalls Igor Nikolaev, chief researcher at the Institute of Economics of the Russian Academy of Sciences. “I wish the state would not forget about it.”