Russia is raising its retirement age. How and why?
- What happened with Russia’s pensions?
- How old are Russians when they retire now?
- Who goes on early retirement?
- Can Russians who want to keep working wait and collect their pensions later?
- So how are they raising the retirement age now?
- What happens to Russians who “come of age” during the transition period?
- And what happens to the people in all those preferential categories?
- How does the government justify these reforms? Why does Russia’s pension age need to rise?
- Will raising Russia’s retirement age really help? Is it a necessary step?
What happened with Russia’s pensions?
The federal government has finally decided to raise the retirement age for government pensions (what Americans know as Social Security). Prime Minister Dmitry Medvedev’s cabinet has drafted legislation that federal lawmakers are expected to adopt in the fall.
Update: This text was first published on June 15, before the legislation had actually been released. Now that the bill is available, we've updated our explainer. Here's a spoiler: the proposed reforms could seriously affect teachers and doctors who want to go on early retirement.
How old are Russians when they retire now?
It’s more complicated than you might think. Usually (if an individual has spent enough years in the labor force, accumulated the necessary “points,” and doesn’t belong to some preferential category), men retire at 60 and women retire at 55. There are lots of variables here, however, and plenty of Russians go on their pensions before reaching these ages. Plenty of other Russians don’t retire until later in life.
Who goes on early retirement?
All kinds of folks — there are three dozen categories for exceptions to the standard pension rules. These categories include people in specific professions (like police officers, soldiers, public transport drivers, and teachers) who, according to the state, work harder than most; people who work in especially difficult conditions (for instance, in Russia’s Far North, in hazardous environments, and underground); and disabled persons, their guardians, and women who give birth to multiple children. For some preferential categories, the state has designated a minimum age for retirement, whereas in other categories individuals only need to work a certain number of years in their field (this is the case with teachers, doctors, and certain “creative professionals”).
A lot of Russian retirees start collecting their pensions early — roughly one third of the whole retired population, in fact. And this is without taking into account everyone getting payments because of disabilities or the loss of their family’s breadwinner.
Can Russians who want to keep working wait and collect their pensions later?
There’s no need to wait. In Russia, you can continue working after reaching the retirement age and collect both your salary and your “retirement-age pension” simultaneously.
In addition to the “retirement-age pension,” Russia also awards what is called a “social pension,” which goes to those who didn’t accumulate enough work experience or retirement points. These minimums are moving targets: today, “retirement-age” retirees need nine years on the job and 13.8 points, but these figures will jump to 15 years and 30 points, by 2030. Men can collect “social pension” payments when they reach the age of 65, and women can start at sixty. Roughly seven percent of all Russian pensioners today fall into this group.
So how are they raising the retirement age now?
The “standard” pension ages are going up five years for men and eight years for women. When the reforms are finally adopted and implemented, men will be able to start collecting “retirement-age pensions” at 65 and women at 63. Russians who can’t rack up the necessary work experience or retirement points will have to wait until 70 (men) or 68 (women).
Pension ages will start going up next year, rising gradually until 2028 (for men) and 2034 (for women).
What happens to Russians who “come of age” during the transition period?
The retirement age would grow by one year during each year of the transition period. In other words, Russians who could have retired in 2019 will now have to wait until 2020, and those who planned to start collecting their pensions in 2020 won’t actually get it until 2022. And so on. Every other year during the transition period, it seems the number of pensioners in Russia will either fall or remain roughly unchanged.
And what happens to the people in all those preferential categories?
The pension age will rise for people in some retirement categories. For example, the retirement age in Russia’s Far North will jump from 55 to 60 for men and from 50 to 58 for women. The same applies to indigenous peoples in the north and the families of killed cosmonauts and soldiers.
Seniority requirements for teachers and doctors would remain unchanged, but the government has drafted a deferral program for early retirement benefits that would add one year's delay every year for eight years, beginning in 2019. In other words, a teacher could work for 25 years and choose early retirement in 2026, but they wouldn't start receiving early pension benefits until 2034.
Other categories that will keep their existing benefits are people who work in hazardous and dangerous environments, Chernobyl victims, mothers of five or more children, and others.
For now, there are no pension reforms planned for law enforcement and military veterans, either. According to First Deputy Prime Minister Anton Siluanov, Russia’s finance and defense ministries have only just started discussing changes to the pension requirements for soldiers and police officers.
How does the government justify these reforms? Why does Russia’s pension age need to rise?
Medvedev says his cabinet is implementing executive orders from President Putin. The prime minister says Russia’s demographic trends (more retirees and fewer workers) have upset the pension system’s balance, putting the state at risk of failing to honor retirement payments in the future. Russia’s Pension Fund is currently running a deficit, and the country’s retirement system is draining money from the federal budget to stay afloat.
Government officials have offered up another justification, as well: The current retirement age was set a long time ago, back in the 1930s. As Dmitry Medvedev has pointed out, life expectancy has jumped more than 30 years since then, and working conditions have vastly improved.
The legislation’s explanatory note (acquired by the magazine RBC) apparently cites the experience of several other countries that raised their retirement ages long ago. The document also reportedly justifies the higher raise to women’s retirement age as a reflection of today’s greater gender equality.
Will raising Russia’s retirement age really help? Is it a necessary step?
Many economists are certain that these reforms aren’t only helpful but essential. The Russian population is undeniably “graying.” The smaller the country’s labor force, the harder it will be to “feed” the retirees. An expert study published last year concluded that Russia would lose more than 5.5 million able-bodied workers by 2030, if the government doesn't raise the retirement age — a major blow to the country’s labor force. The same report warns that raising the pension age still won’t be enough to course-correct the Russian economy, arguing that additional measures will nevertheless be necessary to offset labor shortages.