Pensions the Russians next year will be even worse

The next Global retirement index 2017 from the company Natixis Global Asset Management, in which Russia is among the five worst countries in the world for retirees, of course, any revelation did not. Rather, it is an occasion to revisit the pension and broader social agenda of the future Cabinet of Ministers. The current appeal is meaningless: “a lame duck” (so called resignations of bureaucrats) to make strategic decisions will not be taken.

photo: Natalia Muslinkina

Quoted pension index consists of comparisons of four aspects of pension provision: the value of pensions or funds for a comfortable life of older people, the availability of quality financial services to ensure the safety and growth of savings, availability of skilled care, as well as a clean and safe environment.

First subparagraph, details will be discussed below, although it is considered that if the replacement rate for lost earnings (the ratio of the average pension and average wage) in Russia last year amounted to 33,7% at the norm of the International labour organization 40%.

About the quality of financial services, which in Russia for a quarter century, are considered Bank deposits foreign currency — a shameful constancy, to say nothing. Just look at the statistics of Bank failures in recent years to understand: virtually any 1.4 million (about 24 thousand dollars) is the maximum that the pensioner is guaranteed to count. Anything higher is almost certainly going to burn in the furnace of the bankrupt. But if someone decides not to put all your eggs in one basket and spread your treasure in different banks, it likely will be accused of unfair desire to enrich themselves at the expense of the state and will write to “professional investors” (the scammers-layt).

The availability of skilled care left along with “reform”, more precisely, with the gradual destruction of health. Subtotal: for the first five months of this year, the natural population decline made up 111,8 thousand people, whereas during the same period of 2016 is almost three times less — 41,6 thousand. In 28 regions the death rate exceeded the birth rate in half to two times.

Finally, as part of the ecology of Russia is also nothing to be proud of: the index, we rank third from the end on the harmfulness of exposure to environmental factors and the end of the sixth sub-heading of “biodiversity and habitat”.

Discuss three important problems of the Russian pension system — the low salaries are paid with, or takes into account the premiums, the low rates themselves, contributions and professional ignorance responsible for pension provision. (Problems in our Pensione significantly more, but all loads over each other — in a single note it will not fit.)

However, before about Norway, a recognized Global retirement index as the best country to retired people.

Norwegian pension model in General is similar to ours, but only “in General”. Administrators of the public pension system in Norway is not alone, as we have PFR and two: the pension insurance Fund and the Norwegian Fund pensions for state service. Features first approximately similar to the FIU, but the main aim of the second acts, the pensions of civil servants, as well as — attention! teachers and some other necessary local Union workers, for example scientists or pharmacists.

The purpose of the pension Fund is to ensure participants both main and supplementary pensions. To participate in only one pension Fund it is impossible: first you need to become a client of the pension insurance. Feature coordination of the two funds is that the full pension from these two sources may not exceed the total average salary of a former employee. In other words, the total replacement rate in Norway may not exceed 100%. The actual replacement ratio is 66%.

Oh yeah, I forgot: the participants of the pension Fund are entitled to receive preferential mortgage loans at the expense of the Fund, as well as life insurance. And again. In Norway life expectancy at birth estimated in 2016 82 years (80 years for men and 84 years for women), with almost a standard for Europe the age of retirement to 67. This despite the fact that everyone has the opportunity to be retired at age 62 and live in retirement for 20 years. The shortfall in the Norwegian Pensione missing.

In Russia anything similar is not close. Not only that, the replacement rate does not even reach 40%, work experience in state agencies for receiving state pension in 2017 is 15 years, 6 months, and by 2026 will increase to as much as 20 years (in Norway today — 30 years), so also in Russia, ex-servicemen get their pensions directly from the budgets. The size of The bureaucratic pension allowance begins with 45% of the average salary and ends at around 75%. What to reduced mortgage, we have instead — non-returnable subsidies, that is a freebie.

On pension benefits for our teachers, or scientists — it is better not clinking glasses.

Now, actually, about our problems.

On small salaries in the Russian economy now does not mention just lazy. As well As about the huge “grey” sector, where contributions from income, of course, are not listed. Not dwell on known facts — talk about something else.

I think our Ministers are not exactly known that macroeconomic Foundation of the first industrial revolution in Britain was a high wage employees at a low price to attract capital. In other words, the English Industrialists was profitable to innovate and the elements of industrial mechanization, since, on the one hand, new technological solutions, reduced the cost of production by reducing the number of employees and funding research and development and their early implementation in practice, it was relatively cheap.

In modern Russia the opposite is true: wages are low, the price of capital is high, and besides, the involvement of Western resources restricted by sanctions. So what the “figure” talk in the government? Russian manufacturers adopt digital technology only when absolutely necessary, in order to meet world quality standards, and reduce workers they have no reason: first, the labor is cheap, and secondly, nobody wants to have conflict with the authorities.

The pension system suffers, however, very much, but on a tangent. Once again proving the obvious truth: decapsulating, fully self-contained problems and developments in the economy does not happen.

In the beginning of the article focusing not only on payment but also on account of the insurance premiums was not an accident. Few of today’s high-paying insured know that this year the maximum income taken into account in the future calculation of pension amounts to 73 000 virtually any per month. Everything is transferred over, in every sense of the word offered by the Pension Fund. Well, what a reason to come out of the shadows and show the high “white” income? Correct — no.

In such circumstances, the optimal way is to register in the form of IE (individual entrepreneur) and transfer fees from the amount of income that will go to the pension credit. Why willingly Rob themselves and their children? What to the poor pensioners, the wealthy people their elders and without help.

Another scourge of our pension system, namely small rates of insurance contributions — one of the lowest if not the lowest in Europe — the valiant Russian government, unwavering standing guard over the interests of big business, presented as one of its main achievements.

Well, the Russian “lame” the government consists mainly of dollar millionaires, retired Ministers will not receive from the pension Fund, and the budget (and why do they need pensions?), so close to him and protects major. And the President where to watch? Cost of goods will jump? Well, let’s count.

In recent years, the proportion of wages in our economy (GDP) accounted for about 46% — even take 50%. Now we calculate how much will increase the costs, if the aggregate rate of insurance contributions will increase by 2 percentage points. Right: by 1 percentage point. And if 4? Again, you are right: 2.

Are you sure that the merchants are also linearly increase selling prices? I — no: the market head-on increase in prices would not. At the same time for business the rise in the labor force is another reason to think about the same “number”, not to mention the improved social climate.

The incompetence of pension bureaucrats can fold the whole poem. Immutable one thing: if Russian pettifoggers was really interested in the development of both state and non-state pension provision, they would be 20 years (the Law on private pension funds was adopted on may 7, 1998) have worked at least to learn and implement the common foreign practice, not to dance on the capabilities of the budget.

And yet in conclusion I want to congratulate all not the worst result of the Russia in Global pension index. Next year will be worse — mark my words.

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