Top 5 dangers of pension reform, main risks
• The decision on pension reform, timed by the government under the leadership of Dmitry Medvedev, just in time for the 2018 World Cup, gave rise to discontent and disputes in society. We will not assess whether it is good or bad to raise the retirement age. Instead, consider the five main risks that pension reform entails.
5. Political risk
Decisions like raising the pension threshold lead to a decrease in trust in the government and the growing popularity of the opposition.
• The well-known Russian opposition leader Alexei Navalny has already announced protests against this reform in 20 Russian cities. And, judging by the comments on major Russian Internet portals, such as YaPlakal, even those people who did not support Navalny before are going to take part in these actions.
4. Demographic risk
People of retirement age who are ready to take care of their grandson or granddaughter provide invaluable assistance to a family with a small child. And when planning a pregnancy, many future parents consider whether grandparents can help take care of the baby until it's time to take him to kindergarten.
If the retirement age is raised to 65 for men and 63 for women, then older people have to workinstead of babysitting grandchildren. Are there many among Russian families who can afford to hire a nanny for a baby, if such a need arises?
3. Reputational risk
Despite the fact that the authorities do their best to "take" Vladimir Putin out of the blow of political responsibility, many remember his promise made in 2005: "While I am president, such a decision (raising the retirement age) will not be made!" This will inevitably have a negative impact on the rating of the head of state, not to mention the low rating of the prime minister.
On (pdf), Putin's rating has fallen by 2% over the past two weeks, to 62% (as of June 10). And Medvedev's trust rating is 33%.
Press Secretary of the President of the Russian Federation Dmitry Peskov said that Putin does not take part in the discussion of the bill, although he is following developments.
2. Social risk
One of the main risks of the pension reform is that it can lead to a "slip" of social elevators. If an elderly worker holds a particular position for a very long time, then a young worker, of course, will not receive this position. This may lead to delayed career growth, increased tension in the team and conflicts between people of different ages.
• The fact that there are no plans to raise the retirement age for the “privileged categories” of citizens, primarily military personnel and representatives of law enforcement agencies, does not cause approval in society. At least for now.
1. The risk of employment of older people
Now there is no normal labor market for citizens over 50. And this means that in the future there will be a large number of low-skilled labor – watchmen, cleaners, kioskers, etc. And not because people do not have knowledge, but because they will not be hired anywhere else due to age discrimination.
• If a working pensioner can afford to “dump” his salary, since he has a pension, then an elderly person who is unemployed, but not yet receiving an old-age pension, will find himself in complete poverty and will be ready to work for a penny and without any social guarantees, just to survive.
• In addition, unemployed people who got a job at the labor exchange will have to pay benefits. Whether the budget will be able to save on pensions in the future by paying a large number of unemployment benefits is an open question.
• Ministers believe that society will not experience a shock from the pension reform. And for this, it is planned to do everything step by step – from 2019 to 2034. So, men born in 1959 and women born in 1964 will retire in 2020, reaching 61 and 56 years respectively.
Retirement table with
|Year of birth||year of retirement||Retirement age|
• Recall that at present the retirement age is 60 and 55 years for men and women, respectively.
• It is possible that the pension threshold will be “knocked down” a little, but the fact that the bill will be adopted by the State Duma is almost beyond doubt.
• The law is expected to come into force on January 1 .