The number of pensioners is growing in Russia: they may be forced to moderate their financial appetites

This year the number of pensioners in Russia will increase by 1.1 million people, and almost 570 thousand more will be added in the coming year. This is reported in the forecast of the draft budget of the Social Fund for 2024 and the planning period 2025-26. Over two years, the number of pensioners in the country will increase from 41.8 million to 43.5 million people. This is the maximum value since 2019, when a gradual increase in the retirement age began in Russia.

As noted in the forecast, the influx of pensioners was also provided by new territories – the republics of the LDPR, as well as the Kherson and Zaporozhye regions. Their residents began receiving pensions according to Russian standards on March 1 of this year.

On the one hand, the statistics are encouraging. On the other hand, it does not fit at all with the spirit and letter of the Russian pension reform. After all, the gradual increase in the retirement age for Russians from 2019 was planned in order to reduce the number of pensioners, and thereby increase payments to the elderly by about 1,000 rubles annually. In addition, a reduction in the budget deficit of the Pension (now Social) Fund was expected. And now there are again not fewer pensioners as in previous years, but more.

What future awaits Russian elderly people in the future?

As for the “new Russians”, in Ukraine, the retirement age has not been raised; such a reform, already within Russia, will begin here in 2024.

From the point of view of the pension system, these regions are subsidized. The ratio of the working to non-working population here is even lower than in the rest of the country. And other economic indicators are also still inferior to the Russian average – both in terms of production volume and in terms of the level of salaries from which insurance premiums are deducted.

In general, native elderly Russians will most likely have to moderate their appetites if they expect the state to significantly increase their level of well-being.

– In connection with the emerging statistics of a noticeable increase in the number of pensioners in the country, should we expect a new increase in the retirement age? – we ask Doctor of Economic Sciences, Director of the Institute of Socio-Economic Research of the Financial University under the Government of the Russian Federation Alexey Zubets.

– I guess not. The pension reform has not yet been completed; as is known, it will last until 2028,” he answers. – And until the “old” reform is completed, the government will not begin a new one, this is obvious. In addition, due to the negative reaction of the population to raising the retirement age, the authorities will not step on this rake a second time. You can calm down.

– But how can we understand that the army of Russian pensioners has increased sharply, although according to the terms of the reform, everything should have been the other way around?

– It was clear from the very beginning that when new territories were annexed, the number of pensioners would increase. It must be taken into account that many working-age people left these regions and moved to other countries. Therefore, it was not expected that there would be an increased percentage of the working-age population there from the very beginning. However, on the other hand, these territories will pay taxes and participate in the general economy of the country. Social funds will collect certain money into the budget.

– How will the increase in the number of elderly people affect pension payments in the country?

– In addition to social contributions, one of the main sources of funds for the Social Fund is the transfer of money from the budget. But we can hope that the federal budget will also grow. The government’s plans provide for a rapid increase in revenue, by almost 30%. Additional revenues will offset the additional costs of pension payments.

– In your opinion, when will the pension system stabilize? So that Russians don’t wonder about the prospects for indexation or raising the age?

– For this to happen, it is necessary to increase taxes, including to the Social Fund. The government assures that it does not plan such measures. The pension system will remain deficit-financed from the budget for the foreseeable future. To change this, rapid economic development and increased labor productivity are required. And also the development of private non-state pension insurance. The well-being of pensioners in the West is ensured precisely by this mechanism, and not by the fact that the government sets them large payments. The veterans there save all their lives, putting money aside for their old age, and this money is enough for them to live with dignity, to travel around the world, and much more. We also need to save. However, the non-state pension system in Russia is in its infancy.

In the coming years, and maybe even decades, caring for the well-being of pensioners is their own business… The state pension will not be enough for a normal life.