Vedomosti: "4.2% of GDP a Year"
Giving up the plan to increase insurance contributions to 34% starting in 2010 will cost the budget more than 1 trillion roubles, Deputy Prime Minister and Finance Minister Alexei Kudrin announced yesterday.
The decision was made in early April by Prime Minister Vladimir Putin, who promised to keep the rate of contributions, which are to replace the unified social tax, at 26% in 2010 (it will be levied on annual salaries of up to 415,000 roubles). As a result, treasury expenditure will grow by 2.5% over GDP target for 2009 (no official forecasts for 2010 are yet available).
Actually, the Government will spend even more on the pension system since Mr Kudrin's computations do not take into account the valorisation of pensions beginning from 2010 (those who earned their pension before 2002 will have it increased by 10% plus 1% for every year of seniority prior to 1991). According to the Pension Fund, the increase will be 1,160 roubles on average (the average labour pension in 2010 will be 7,946 roubles).
The spending, including valorisation, was announced by Minister of Healthcare and Social Development Tatyana Golikova yesterday: 1.7 trillion roubles, of which 499 billion roubles will be spent on valorisation. That amounts to 4.2% of 2009's GDP.
Beginning in 2011 insurance contributions will increase to 34%, which will relieve some of the load on the budget. The increase will cut the cost of covering the Pension Fund deficit to 511 billion roubles, Ms Golikova said. President Dmitry Medvedev, however, has asked the Government to consider the possibility of compensating business for the increased load.
By Nadezhda Ivanitskaya, Dmitry Kazmin
