Russia Will Not Raise the Retirement Age…Yet

May 28, 2016, 1:44 PM UTC
Retirees As Russia Extends Pension-fund Contribution Freeze
Pensioners walk on the bank of the River Moskva in Neskuchny Garden in Moscow, Russia, on Sunday, April 19, 2015. Russia will extend a freeze on pension-fund contributions for another year and put off a decision on an overhaul that may result in the confiscation of 3 trillion rubles ($52 billion) of retirement savings, a survey showed. Photographer: Andrey Rudakov/Bloomberg via Getty Images
Bloomberg Bloomberg via Getty Images

Russia’s pension system faces a growing deficit that must be tackled, but raising the retirement age is not the only option, President Vladimir Putin’s economic aide Andrei Belousov said on Saturday.

However policy alternatives such as raising tariffs or social payments “are rather tough,” he said on the television program Vesti when asked if the retirement age had to rise.

Putin said late last year the retirement age would have to go up at some point but the time had not yet come.

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Russian women can now receive pensions from 55 years old and men from 60 years. The Kremlin has treaded cautiously with the politically sensitive issue but supporters of a higher retirement age argue it is essential because the country’s workforce is shrinking.

“Of course it is not inevitable, but the alternatives are rather tough,” Belousov said.

“The alternatives are raising tariffs, social payments,” he said. “Today our Pension Fund is not balanced, it has a deficit of around 2 trillion roubles ($30.4 billion) and the trend is for it to grow. Something needs to be done.”

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The issue has become more urgent recently as Russia’s economy has slumped into recession and the budget has been in deficit. Raising the retirement age would help curb the deficit.

Belousov also said in the interview shown on Saturday there was a consensus that it was not possible for Russia to achieve annual growth of more than 1-2% in the foreseeable future with its current economic model.