RUSSIALINK TRANSCRIPT: “[Putin] Conversation with 2018 FIFA World Cup volunteers. [Excerpt re: Pension Reform]; During his visit to the Kaliningrad Stadium, Vladimir Putin met with 2018 FIFA World Cup volunteers” – KremlinRu
(Kremlin.ru – July 20, 2018)
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Question: Mr President, can I ask you a question not related to sports? Yesterday the State Duma adopted amendments to pension legislation in the first reading. Of course, you monitor the Government’s proposals. It is very important for us to know your opinion on this issue.
Remark: Galina, I do not think we should fear the Pension Fund. We are young and active. The main thing is not to stop but move forward.
Vladimir Putin: Of course, this issue is very sensitive for a large number of our citizens. And, you know, it did not appear just yesterday. It has been discussed with various degrees of intensity during many years. Different options were proposed. And when I was asked in the past, and am asked now, which one I like, I can say: not a single one. I do not like any option that involves increasing the pension age.
And I can assure you, few people in the Government like it. Why? Because the majority of our citizens cannot like it. A person plans to retire, whether to relax or to continue working to receive some additional income, and if this does not happen, people see nothing good. And this is really so.
But what are the experts saying? We should not be guided by emotions but a real assessment of the economic situation, the prospects for its future development, for the development of the social sphere. What do they say? Look. Young people might not be so interested in it, but it still concerns almost everyone.
The decisions on the pension age (55 for women and 60 for men) were made in 1956. I asked, and the Government examined the minutes of the meeting when these decisions were made. You can read what they said. When our colleagues back than made this decision, they said that as demographic indexes and life expectancy go up, so will the retirement age. Let me remind you that the average life expectancy was 67 back then. But nothing was done.
In 1995, another attempt was made. A resolution of the Russian Government was adopted in 1995; I think it was Resolution No. 790. It can be found and read. It says that the pension age must be increased but in the second decade of the 21st century.
It is 2018 now. We, “the grateful descendants,” now need to make some decisions. Should we be doing more or not? By and large, we could afford to do nothing for the next five, six, seven or maybe even ten years. As a matter of fact, we have enough resources to maintain the pension system. However, what is the situation now and what will it be in the near, medium and distant future?
Look, I mentioned that the average life expectancy in 1956 was 67. Now, we are up to 73.5 on average. Next year, it will be 74.3. According to estimates – which are most likely accurate – by the end of this transition period (that is 2028, as proposed by the Government), the average life expectancy for men will be over 75. The average life expectancy for women at the end of the transition period (that is 2034) will be over 85.
What does this mean in practical terms? Let’s not go back as far as the 1950s, but in 1970, I believe, there were 3.7 workers per pensioner. Do not be embarrassed by deciles with regard to people, this is statistics. Today, there are two workers per pensioner. That is, almost half what it was in 1970. In other words, there are six workers for every five pensioners. The situation will be changing but not in favour of the workers: their number will decline. There will be a time, and it will come fairly quickly, when the number of workers will equal the number of non-workers and continue to decline, and then either the pension system will collapse, or the budget and reserve funds from which we are currently financing the pension system deficit, will collapse.
Of course, we are faced with many challenges in our economy, but it is running steadily and is expanding, and, generally speaking, it has a large margin of safety. So, if we think not about today, but tomorrow, then, of course, we need to keep all these things in mind.
By the way, even by 2030 (this is forecast data, but fairly reliable), men are expected to have over 15 years after retirement, and women, over 24 years.
You know, this is a sad topic to discuss in a way, but when decisions of this magnitude and sensitivity are made for people, you need to proceed from concrete numbers and rely on realistic professional forecasts.
So there is no final decision yet. The draft law was passed in the first reading, with no amendments or additions. I will certainly listen to all opinions on the subject and follow the discussion which is already unfolding. Naturally, we should listen to people who propose something sound and reasonable and who are governed by the interests of the country and its citizens, instead of people who use this issue, which is sensitive for millions, to gain publicity.
Why? (I will return to citizens’ interests later.) Because if we do nothing at all and if it comes to some serious consequences for the pension system or for the state funds from which it is financed, first of all, we will have to keep retired people’s incomes forever low and they will keep filling the ranks of the so-called poor, while our goal is to raise people’s incomes and reduce the number of poor people. And then, everything might burst, like I said, which could affect those who are affected by raising the retirement age today. So, the current government would simply cheat people, saying, “Everything is fine, we will wait another five, seven, 10 years.”
But that would not be the end of it. We cannot avoid making drastic decisions. But what exactly? I will say again, let’s see how the discussion unfolds, let’s listen to everyone and weigh all these points of view. There are a lot of nuances to it, and I would not like to go into these details now, this is not the right place for it. But we will take it very seriously. First of all, in order to protect our citizens’ interests, both today and for the long term, so that there is stability and dependability in the economy and the social sphere, including the pension system.
Remark: Thank you.
Vladimir Putin: This is a serious issue, so please excuse the monologue.
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