Russia has overtaken America in terms of pension growth rates

Last year Russia was among the five countries with the most noticeable growth in pensions in real terms. Maybe many will be surprised by such success. Given our insignificant old-age payments… Of course, the majority of elderly people in our country continue to consider their work experience to be clearly undervalued by the state, but it’s still nice, because in terms of the growth rate of such payments, we have even outstripped the United States.

According to Rosstat and the Organization for Economic Cooperation and Development, we lost the palm in the growth of government provision of well-deserved rest for our citizens in 2023 only to Turkey, Mexico, Belgium and Spain, where the real growth of similar payments was 17.4%, 15.6%, 2.8% and 2.5% respectively. In Russia, pension accruals grew by 2.4% last year.

Let us recall that due to high inflation in 2022, the old-age pension was indexed in our state twice: at the beginning of the year by 8.6%, and from June 1, 22, unscheduled by another 10%. In total, at the end of 2022, accruals to unemployed persons increased by 19.5%.

The numbers are impressive, but pension payments in Russia are a favorite topic of conversation both in parliament and in the kitchen. Since 2016, they have ceased to be increased for working pensioners (payments for this category of citizens are indexed only to an amount slightly higher than inflation).

But, as you know, there are average statistical indicators that Rosstat gives us at the end of the year, and there are real statistics reflecting consumer prices in stores. The second data always turns out to be higher than the first dynamics.

This is why few Russian elders are satisfied with their pension provision. Prices in stores are ahead of inflation, and it is not at all surprising that formally our pensions have increased not by 19.5%, but by only 2.4%.

However, everything is learned by comparison. It is not only Russian veterans who believe that they are forgotten and abandoned by their authorities. In most countries, against the backdrop of a growing economic crisis, the situation with pensions is in a deplorable situation.

For example, in the USA, real growth in pensions was only 2.2%. And in 25 countries, when adjusted for inflation, payments turned out to be critical. Estonian pensioners suffered the most – their real pension (adjusted for inflation) was reduced by almost 10%. In Poland, old-age payments fell by 7.7%, in Costa Rica by 7.1%.

It’s only the beginning. Unlike their colleagues from other countries of the world, Russian pensioners have another opportunity to increase payments upon retirement. The fact is that starting this year, we have a voluntary funded part of our pension. For 15 years, participants in this program for co-financing future savings with the state must deposit a certain portion of their income into their accounts in an independent pension fund. Theoretically, during this period you can accumulate a monthly pension of up to 50 thousand rubles. In modern times, Russians consider this amount to be a dream pension.

In a word, getting into the top five in the world ranking in terms of pension growth is just a small thing. The berries may appear later, when Russia rises even higher from fifth place thanks to the new program.

However, there are two “buts” in this project. In order to put money aside monthly into a voluntary fund, an individual’s salary must be at least 120 thousand rubles. per month. Not every Russian, especially those further away from Moscow, can boast of such government subsidies. Second point: no one knows what will happen to the amount of 50 thousand rubles. in 15 years. It cannot be ruled out that in conditions of inflation, the purchasing power of the dream pension will be lower than the current average of 23 thousand rubles.

“Russia’s inclusion in the top five countries with the most noticeable growth in pensions speaks not about the amounts themselves in physical terms, but about the level of their indexation,” says Associate Professor of the Department of the Chamber of Commerce and Industry of the Russian Federation “Human Resource Management” of the Russian Economic University. Plekhanova Lyudmila Ivanova-Shvets. — The growth was associated with indexation based on the results of 2022, when in our country it was very high.

— Russians often complain about their pensions, although they are indexed above the official inflation rate. Why is this happening?

— Those who retire in our time and who have accumulated a sufficient number of points will receive payments more than those who retired 15 years ago, with Soviet experience. Today’s pre-retirees are in a more advantageous position. The reform that began in 2002 to transition from a pay-as-you-go to a pay-as-you-go pension system played a certain role in this.