The main claim to the project of two-stage indexation of pensions was voiced

“It is not clear what will happen to inflation in 2025-2026”

Based on the principle of “new – well-forgotten old”, the Ministry of Labor has developed parameters for indexing the insurance pension for non-working pensioners for the next three years. In 2025 and 2026, it will take place in two stages, as was practiced by the state until 2019, when inflation was at an easily predictable and consistently low level. The return to this mechanism is quite justified, only the indexation figures announced today may turn out to be irrelevant in a couple of years. This means that they will have to be revised – which is not so easy in the face of a growing budget deficit.

As follows from the draft budget of the Social Fund, from January 1, 2024, insurance pensions will be increased by 5.3% (as a result, their average annual amount will be 22,772 rubles), from February 1 and April 1, 2025 – by 4% and 3, respectively. 8% (24,120 rubles), from February 1 and April 1, 2026 – by 4% and 2.8% (25,690 rubles), respectively. Moreover, from April 1, not indexing, but “adjustment” will be carried out, this is the word that appears in the document.

In parallel, the size of the fixed payment to the insurance pension will also be increased: from April 1, 2025, it will amount to 9,196.62 rubles. Against the background of the reform to raise the retirement age, the authorities expect a further decline in the number of recipients of the old-age insurance pension. In 2024 – up to 39.96 million people, in 2025 – up to 39.87, in 2026 – up to 39.69 million. As for the budget of the Social Fund, it will be in surplus in the next three years, in particular, in 2024 In 2009, revenues were determined in the amount of 15.9 trillion rubles, expenses – 15.8 trillion.

Two-stage (double) indexation of pensions operated in Russia until 2019. From February 1, it was based on the predicted level of inflation, and from April 1, it was based on the level of income growth of the Pension Fund (now the Social Fund). According to the current forecast of the Ministry of Economic Development, in 2024-2026 inflation will not exceed 4%. In reality, however, this optimistic scenario is likely to have alternatives. They can take shape under the influence of geopolitics, the situation in the Russian and world economy, the dynamics of the ruble exchange rate, the growth of government spending, the cost of goods, utility tariffs, and so on. There is always a risk that something will go wrong. For example, here is how inflation in the country changed over the previous 3 years: 2020 – 4.9%, 2021 – 8.4%, 2022 – 11.9%. Not too predictable and fluid, right?

“Indexation is always associated with a large amount of work, primarily computational work,” notes Aleksey Zubets, a professor at the Financial University under the Government of the Russian Federation. – It is clear that holding it twice a year is technically more difficult, which is why in 2019 they decided to abandon it: then prices were consistently low. Today they are not so predictable. Accordingly, in general, the authorities are acting quite logically, using a more flexible indexation mechanism and, to some extent, preventing the devaluation of pensions. When indexation is carried out only once a year, and inflation is growing at the same time, older citizens actually lend to the state and allow the Ministry of Finance to save on budget expenditures.”

On the other hand, it is not clear what will happen to the economy in six months, not to mention the horizon of 2-3 years. The inflation target of 4% seems unrealistic to Zubets. The expert does not rule out that the government will have to revise and recalculate the parameters now outlined in the draft.

“This is a purely technical measure aimed at improving the calculation algorithms,” says Sergey Smirnov, a leading researcher at INION RAS. – After all, in fact, indexation is carried out retroactively, not always consistent with the realities of today. In a two-step format, it will allow a more adequate response to any changes in the situation with consumer prices. No wonder the project uses the term “adjustment”. However, there are also questions about the project: was it worth naming specific figures if it is impossible to calculate inflation in the long term in advance? It is clear that the three-year budget of the Social Fund has a “floating” character, that it is reviewed every year, taking into account the changing situation. But why not include a clause in the document, for example, “with the condition that inflation does not exceed 4%?” And the announced amount of the average insurance pension in 2026 at 25.6 thousand rubles does not cause great enthusiasm even from the standpoint of today. Now, if the state announced that at the end we would receive a payment of 40 thousand, this would give the project a completely different weight.