“They will raise the retirement age again”: is it possible in Russia

Sergey Sukhostavets, COO of the Rocket Work platform: “Certainly, the demographic crisis, the aging of the workforce are problems that many countries face. They also provoke a decline in labor productivity, which slows down economic growth, and against the backdrop of an impending global recession, naturally forces governments to reassess spending, including on the social sphere. So French history may well repeat itself in the near future in other countries, especially in socially oriented state models.

Russia has already gone this way, raising the retirement age in 2019, and is unlikely to do it again. On the one hand, now is clearly not the time to create another reason for internal social tension, on the other hand, the measures taken in 2019 should be quite enough.

The problem of a shortage of workers and an increase in labor productivity can be solved much more efficiently by modernizing production facilities and approaching personnel – switching to a personnel rental model and outstaffing. We are already observing this process, and against this background, the number of freelancers and self-employed is naturally growing – by 2030, their number in our country may well reach 12-14 million, or approximately 17% of the total economically active population. For some of them, self-employment will be the main source of income, for others it will be secondary employment and an additional source of income. For business, hiring personnel and transferring competencies to the staff will allow you to optimize costs, which is especially important in times of crisis.

I am sure that in the future this category of workers will also begin to actively invest in their own future and become new payers of voluntary contributions to the Pension Fund, which will make the system more stable and will not require additional changes in the retirement age.”

Olga Belenkaya, head of the macroeconomic analysis department of FG Finam: “Raising the retirement age in Russia turned out to be an extremely unpopular measure. And, in general, not so effective – although, according to Rosstat, from January 1, 2019 to January 1, 2022, the total number of pensioners in Russia decreased by almost 1.8 million people, and old-age pensioners – by 2.07 million people (including as a result of covid), the ratio of employed to pensioners has changed slightly: the number of employees per 1 pensioner in 2018 was 1.55, and in 2021 (latest available data) – 1.57.

The pension “reform” included an annual indexation of pensions for non-working pensioners at a level slightly above official inflation. However, the ratio between the average monthly insurance old-age pension of non-working pensioners and the average monthly nominal salary in the economy has decreased, according to the Accounts Chamber (CA), from 35% in 2017 to 31.4% at the end of 2022.

And further, according to the JV forecast, the trend will continue, and by 2026 the ratio will drop below 30%. With such figures, it would be extremely difficult to convince the population of the advisability of a new increase in the retirement age.

The decline in business activity in the Russian economy, partial mobilization and migration outflow, of course, worsen the situation with the payment of taxes and insurance premiums. However, many of the relocators, while maintaining the status of a tax resident, continue to work remotely in Russian companies and pay taxes, so the main damage here can be caused by legislative initiatives with a ban or restrictions on remote work from abroad.

The transition of the federal budget from a surplus to a planned deficit for the next 3 years, in turn, may make the problem of annual transfers to cover the deficit of the Pension (now Social) Fund more sensitive. It is likely that this will contribute to the search for ways to reduce the deficit of the Pension Fund – not necessarily a new increase in the retirement age, perhaps – an increase in the requirements for seniority and the number of points for receiving a pension. However, now, when society has already received stress over the past year due to a special operation in Ukraine, sanctions, a decrease in real disposable income, mobilization, this is hardly the right time for such experiments.”

Alexander Safonov, Professor of the Financial University under the Government of the Russian Federation: “We will not see a new pension reform in Russia in the near future, since the transition to a new retirement age, which began in 2019, has not yet been completed, and our newly established retirement age (60 for women and 65 for men) corresponds to the world average.

When trying to raise it, the authorities will face problems with the employment of older ages, which will force people to retire early. The only correct solution in this case is only to stimulate employers in terms of creating favorable working conditions for older people.”

Ruslan Spinka, Director of Sales and Customer Service at Fontvielle Investment Company: “Usually a prerequisite for a pension reform is the aging of the population. When the able-bodied population cannot economically support pensioners, the authorities have to take a number of unpopular decisions in this direction in order to stabilize the situation.

In most countries of the world, especially developed countries, the situation is as follows: the birth rate is low, and life expectancy is gradually increasing. In this situation, different options are possible. In the United States, for example, the lack of a working-age population is compensated by migrants who come to the country to work, valuing US citizenship. In Japan, due to high-tech industries, one working citizen can “provide” for several pensioners, which also smoothes the situation somewhat.

If there are prerequisites for the fact that the burden of supporting the older generation becomes unbearable for able-bodied citizens, the authorities have to take measures. If the moment is missed, then such an economic situation can cause a chain difference, negatively affecting the birth rate. One of the most obvious solutions is a pension reform to raise the retirement age.

However, it should be understood that pension reform is not a one-time initiative. For example, in Russia, its step-by-step implementation involves a decade-long transition period – from 2019 to 2028. In addition, to make such a decision, a certain level of public loyalty is required, which sometimes requires a long informational preparation of the population for an innovation that is always perceived negatively by citizens. In our country, probably, the implementation of the current pension reform will first come to an end, then its results will be analyzed, and then further steps to improve the overall demographic situation will become clear.”