From next month, pensions earned during the Soviet period will be increased.
The coming month will see the second substantial increase of the pension within a year. It will benefit all pensioners. The basic state retirement pension will increase by more than 31%, bringing the average retirement pension to 6,617 roubles, while the average social pension will rise to 4,268 roubles, to be above the official subsistence minimum for the first time. The next pension increase is scheduled to take place a month later, on January 1, 2010. And there will be more increases next year. Prime Minister Vladimir Putin has stressed that this would eliminate poverty among pensioners.
Addressing the Second National Pension Forum yesterday, Putin detailed what the government had already done to raise pensions and what it will do soon. Even on such a serious matter, the prime minister could not refrain from joking.
"You cannot jump over your own head, goes the saying. But good athletes can jump 2.4 m and higher. We should do the same, and we will do it," he said. And he went on to cite specific figures.
According to Putin, as of January 1, previously-earned pension entitlements will be reassessed (valorised).
"As a result, the old-age retirement pension will exceed 8,000 roubles a month," the prime minister said. "While pensions will increase by 1,100 roubles on average, for pensioners over the age of 70 the increase will be 1,600-1,700 roubles. Poverty among pensioners will be eradicated."
Even those pensioners whose incomes are still below the subsistence minimum will enjoy extra benefits, made available by the regions. The federal centre will compensate up to 75% of the outlays the regions will make for this purpose. The programme will reach 5.7 million people, mainly in the Far East, Siberia and the Northern areas.
In 2010, the government will spend an unprecedented amount, 10% of the country's GDP, to finance social benefits.
"This is a lot of money by any standards. We spend less than 3% on defence," the prime minister said.
Pensions have increased by 150% since 2007, from 25 to 40% of the average wage in the country. Experts call this percentage a "replacement rate."
The next speaker, after the prime minister, was Healthcare and Social Development Minister Tatyana Golikova. She said that some regions were deliberately understating the regional subsistence minimum to less than the nationwide average of 4,870 roubles, because in that case the shortfall is compensated for out of the federal budget. If the "regional subsistence minimum" is higher than average, it is the local budgets that make up for the shortfall. There are, however, only 17 such honest regions in the country (including Moscow).
Raising pensions is all very well, but the burden on the budget may become too heavy, experts warn. So money should be spent above all to create new jobs rather than raise pensions. Then, in a couple of years' time, tax revenues will increase, making it easy to raise pensions, says Agvan Mikaelyan, General Director of consulting company Finekspertiza.
"To raise pensions is the right decision," says Yevgeny Gontmakher, deputy director of the RAS Institute of World Economy and International Relations. "The authorities have not renounced their plan to restructure the economy. In reality, President Dmitry Medvedev and the prime minister raised this issue at the United Russia Congress. It's another matter that economic reform takes time, while pensioners must have a normal life now."
Pavel Arabov