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Nov 23, 2022
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“Accountants” PFR bury the indexation of pensions for working pensioners

PFR "accountants" bury the indexation of pensions for working pensioners

Photo: Kirill Kukhmar/TASS

The Pension Fund of Russia argues that the indexation of pensions for working pensioners can lead to negative consequences for the economy. This conclusion is contained in a letter from the first deputy chairman of the board of the PFR Natalia Petrova to the Russian tripartite commission for the regulation of social and labor relations, which was at the disposal of the media. Among them is a reduction in the level of pensions for non-working citizens in favor of the working ones, as well as additional expenses from the budget in the amount of half a trillion rubles.

“In connection with the additional indexation of insurance pensions by ten percent from June 1, 2022, the additional need for federal budget funds for the indexation of pensions (with additional indexation for previous periods) of working pensioners in 2022, taking into account delivery costs, would amount to 498.7 billion rubles,” the document says.

Petrova also argues that the return of indexation of pensions to working pensioners will lead to a redistribution of limited budget funds from non-working citizens to working ones, but for the former, the pension is the only source of income, so it is more important to maintain it at a higher level.

The deputy chairman of the board of the PFR recalled that the intended purpose of pensions is to provide a livelihood for those who have lost their ability to work due to old age or disability. For working pensioners, the insurance pension, in fact, is a benefit.

“Since working pensioners have a source of income to cover these costs in the form of wages, the insurance pension and the fixed payment established by them are paid without indexation,” she explained.

Recall that the indexation of pensions for working pensioners was stopped back in 2016. Then the moratorium was called a temporary measure designed to balance the country’s budget and the FIU. However, six years later, the indexation of this category of pensioners was never returned, although bills with such initiatives are periodically submitted to the State Duma. The financial bloc of the government opposes and points out that these are too big additional expenses. Last year the finance minister Anton Siluanov even stated that it is generally “not fair” when “while receiving both wages and pensions, you say – let’s also index the pension.”

Director of the Higher School of Finance of the PRUE G. V. Plekhanov Konstantin Ordov explained to Svobodnaya Pressa that, in fact, the indexation of pensions for working pensioners could be a good measure to support the real sector of the economy, not to mention the social component.

– It is important for yourself to decide once and for all what a pension is. Or it is money earned by a person for his entire career, which the state, as part of its social responsibility and obligation, then pays to a pensioner. Or it is some kind of social duty of the state, connected simply with the desire to help the elderly. But then it is not clear why the level of the insurance pension is tied to the requirements for the labor path.

The social function implies the need for indexation of pensions for working pensioners. This means that it is necessary to look not for risks, but for opportunities for this indexation. 500 billion rubles is certainly not such an unbearable amount, because we have the National Wealth Fund, which exceeds 10 trillion rubles. Why did we still accumulate it, if not in order to use it at a certain moment for social guarantees for people who do not have other sources of income?

And this is not the only source of funds. For example, when we raised VAT, budget revenues increased by 600 billion rubles in annual terms. Even if you do not consider other options, the indexation of pensions is the responsibility of every citizen. Society may be prepared for more tax pressure in order to ensure indexation.

There are other options. Of course, now is not the best time economically, but in difficult times, the privatization of state property can also help to index pensions. Our public sector has been growing in recent years and is currently posing a threat to the efficiency of economic development as such.

You need to understand that the indexation of pensions is an eternal question, like inflation, which predetermines the need to increase payments. The issue of economic turbulence is a temporary issue, but the lack of indexation is a fundamental point that for a long time can form a negative attitude towards state authorities, distrust of economic policy. Therefore, it is especially important, even in difficult times, to maintain the trust of citizens and the conviction that social groups in particular need will be supported in any development of events.

We are talking about the fact that almost 5-7 trillion rubles get stuck in the budget system in the process of money circulation. 500 billion, although a significant figure, it definitely did not compare with the social, political and economic effect that we expect.

“SP”: – What is this effect?

— Indexation should support solvent demand. In our country, pensioners traditionally consume Russian products of not the highest price range, which should become a measure of support for the real sector and import substitution. It worked before, and it worked very quickly. In our difficult economic times, this is one of the arguments in favor of the fact that the indexation of pensions for working pensioners can be considered as an anti-crisis measure of a very rapid positive impact on the economy.

Economist Mikhail Belyaev also believes that the refusal of indexation is justified by purely “accounting” points, and if funds are found for it, which is quite possible, this would have a beneficial effect on the economy as a whole.

– The topic of indexation of pensions for working pensioners is “eternally alive”, since there are always some arguments against it. But these are arguments that demonstrate a purely bureaucratic, accounting approach – what resources will have to be redistributed, who will get them. No one expresses the point of view that a pension is, first of all, a social payment. No one takes the position of pensioners who are forced to work because they do not have such a large pension and salary.

There is a very small proportion of people who hold high positions, have retired and continue to work. The rest of the pensioners are employed in low-paid positions, and, given that their pensions are low, they cannot retire. Therefore, the main argument that they already receive too much, having a pension and a salary, does not work. Again, this is purely an accounting approach.

If you take a social point of view, and you need to take it, you cannot consider the indexation of pensions only as a negative impact on the economy and a direct deduction from the budget. In fact, this is an increase in consumer demand from pensioners. They don’t get much, so almost all of their money immediately goes to the market, increasing aggregate consumer demand, which, in turn, gives impetus to the development of the economy, small and medium-sized businesses. This is the specificity of the product range of pensioners, they mainly spend money in these areas.

And it is quite difficult to understand the argument that if we increase payments to some, we will have to reduce them to others. That’s why there are officials of the PFR and other management structures to think about where to get the money from. The easiest option is to simply redistribute them. In fact, we need to think about how to increase these funds and solve acute social issues, for this officials exist, this is their direct responsibility.

“SP”: – Is it so difficult to find the amount of 500 billion rubles?

– On the one hand, it is not so little. On the other hand, we have many sources – both the National Welfare Fund and other funds. In addition, it is not entirely correct to measure social problems only with money. The pension fund and the budget are different things, but there is a certain overflow of money, and it is quite possible to think about how to fill them. For example, to see what can be done with the tax scale, and with illegal gray employment, in which a lot of money is spent on taxes. With a modern digital economy, if you get down to business, these issues can be resolved very simply.

You just need to get down to it, you just need political will. And it is very easy for officials to find negative arguments, especially since they understand that no one will object to them, since no one has the courage.

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