By Vadim Potapenko/Mikhail Khazin
Translated by Ollie Richardson and Angelina Siard
cross posted with http://www.stalkerzone.org/pension-reform-as-a-fifth-column-tool-to-overthrow-putin/
Original title: “About a fair pension system”
The full version of this study authored by Vadim Potapenko that this article is based on can be read here (in Russian only)
The pension system can be considered fair when it can maintain an acceptable standard of living for pensioners and at the same time doesn’t cause significant negative effects on economic development. Increasing the retirement age in itself isn’t capable of solving the long-term problems of the Russian pension system. Reformation of the pension system is being constantly discussed in the government of the Russian Federation and in the expert community. Discussion is quite often splashed out in the public space. Specific decisions haven’t yet been made, but it is easy to notice that Russian society perceives this topic with extreme sensitivity. First of all because it is impossible to recognise the past attempts at forming a long-term pension system model in our country as being successful.
The lay observer can have the impression that pension reform is nearly the key element of the economic agenda that the successful development of the economy in the next few years depends on. But is this so?
The need for the soonest changes in the model of providing pensions is substantiated by three main theses.
The 1st thesis is demographic, based on the fact that the working-age population is rapidly decreasing and with the current parameters of the pension system (first of all – the retirement age) the weight that pensions puts on the economy and working citizens can become unacceptably heavy.
The 2nd thesis is budgetary: the growing volumes of transfers to the pension system (the so-called budget deficit of the Pension Fund of the Russian Federation, PRF) are an excessive burden for State finances.
The 3rd thesis is structural, affirming that mechanisms of retirement are imperfect and there are too many pensioners/recipients of privileges in the system. The forced increase of the retirement age is often considered as a radical way of solving these problems.
However, the pension system is also an important element of the economy, which has an impact on its development in a number of channels. That’s also why actions aimed at reforming the pension system should be considered from the point of view of its complex impact on economic dynamics. Attempts at solving fiscal tasks on the basis of changing the parameters of the pension system bear long-term risks, the main one of which is undermining society’s trust towards the social policy of the State.
Let’s now consider in more detail each of the groups of arguments in favor of the radical pension reform.
Backbreaking pension burden is a myth
The perspective demographic situation in Russia doesn’t look catastrophic at all. Real demographic loading, in our opinion, is determined not by the dynamics of the working-age population, but by the ratio of the number of dependents and employed persons. And here in the next few decades everything will be not so bad (see the graphic).
The demographic load
In 2017 this figure was equal to 103%, i.e., for every 100 employed persons there were 103 dependents – which includes also unemployed pensioners, children, the unemployed, and the economically inactive working-age population. Even in the toughest demographic scenarios the level of the demographic load calculated in such a way by 2050 won’t exceed the values that were already recorded in the late 1990’s. And this doesn’t take into account the growth of labor productivity in the last 15 years and its predicted growth during the period up to 2050.
“Attempts at solving fiscal tasks on the basis of changing the parameters of the pension system bear long-term risks, the main one of which is undermining society’s trust towards the social policy of the State.”
If to refer to inter-country comparisons, then it will be possible to draw the conclusion that the current level of the demographic load in the Russian Federation is quite moderate. For example, already now in Poland the ratio of the number of dependents and employed persons exceeds 130%, in France — 150%, and in Finland — 120%. But in Russia, according to our estimates, the level of 120% can be exceeded only closer to 2030, and the current Polish level — only closer to 2040.
The level of the pension load on the Russian economy isn’t excessively high either. Even in the conditions of economic stagnation of 2014-2016 the volume of pension payments in our country didn’t exceed 7.5% of GDP. For comparison: in the most developed EU countries (Germany, France, Italy) this figure totalled 12–17% of GDP, and in the countries of Eastern Europe (Romania, the Czech Republic, Poland) it was in the range of 8-12% of GDP.
The load of insurance payments on the Russian economy (7.1% of GDP in 2017) can’t be considered as ultra-high. For example, in the most economically developed European countries with a mainly solidary pension system it is significantly higher than it is in Russia: in Germany — 17% of GDP, in France — 19%, and in Italy — 13%. In the countries of Eastern Europe its minimum level is noted in Bulgaria (about 8% of GDP), but in Poland, which is comparable to Russia in terms of GDP per capita, it is already 14% of GDP.
Thus, Russia allocates a rather small volume of resources for the provision of pensions. At the same time it is obvious that at the current level of payment for labor in our country (the average salary in 2017 was 39,000 rubles, the median — 30,000) even achieving the level of 40% of salaries being replaced with pensions recommended by the International Labour Organisation isn’t capable of providing an acceptable standard of living for most Russian pensioners.
One more consequence of the low level of labor payment in the Russian economy is the impossibility of forming a somehow significant obligatory accumulative component of the pension system. For the overwhelming part of the population of the Russian Federation attempts to force the population to save up their pension can lead only to a decrease in the level of consumption, which, in its structure, with the prevalence of food and obligatory payments in it, has an archaic character.
In the current conditions accumulative pension programs can have a voluntary or corporate character, providing the possibility to save up for the most well-to-do layers of the population. It is also necessary to note that it is hardly possible to call the existence of pensioners/early retirees a factor that is capable of influencing the economy in a sharply negative way. As of the beginning of 2018, only 6.8% of the recipients of pensions according to age didn’t reach the official border of retirement age. Moreover, in recent years the proportion of pensioners/early retirees has reduced: at the beginning of 2008 it was already 12.2%.
Not a question of accounting
The key question during the discussion of pension reform — changing the retirement age — is connected first of all to ensuring social justice. Moving the borders of retirement isn’t just changing the volume of payments to pensioners. This is an action that involves a whole string of socio-economic consequences connected to the structure of employment, the income of the population, and the system of social support. And it is necessary to evaluate these consequences all together.
If to consider the question of the retirement age from the point of view of demography, then now a certain imbalance developed that is connected, firstly, to distinctions in the expected life expectancy between men and women, and secondly, with the very high death rate in Russia. The expected life expectancy of women after reaching retirement age is equal to 26 years, whereas for men the same indicator is 16 years of age. The probability of a 20-year-old woman living up to pension age is 0.92, and for a man — 0.70. If for Russian women the demographic indicators characterising retirement age are at the level of the most economically developed European countries, then for men they are still unacceptably low.
Thus, there are no reasonable demographic arguments in favour of immediately increasing the retirement age for men. Taking into account demographic characteristics, increasing the borders of retirement for women can be discussed, however it’s unlikely that raising this level just for the weaker sex will be unambiguously apprehended in society. In addition, there can be undesirable indirect effects — in particular, a decrease in the birth rate: it’s not a secret that many women today make the decision to have a child counting on the help of young-looking retired grandmothers.
If indeed the process of changing the age of retirement will nevertheless be started, then it has to be gradual so that the level increases for several months per year. Long-term demographically justified reference points for a possible increase of the retirement age, according to our calculations, are as follows: 62 years for men and 60 years for women. This level of new retirement ages must be gradually reached by 2035. By this period the acceptable level of the expected life expectancy can be achieved in the condition of reaching the new borders of retirement age and the probability of living up to them. With the faster change of these borders there will be an essential deterioration of the demographic characteristics for the retirement age population (a decrease in the expected life expectancy during retirement and the probability of living up to it).
Increasing the retirement age is closely connected to the condition of the labor market. Will people of older ages be able, in the conditions of raised retirement age borders, to have work and thus provide an acceptable level of income? If the rate of employment and wages in these groups of the population won’t considerably change, then an increased retirement age will simply lead to a decrease in the real level of their income.
The elderly population probably has no essential potential in terms of growth of employment. This is demonstrated both by the dynamics of levels of the economic activity of elderly people for the past 20 years and the inter-country comparisons of these levels. Among other things, such a situation testifies to the not very high demand of elderly workers in the labor market.
We will try to evaluate the direct and indirect consequences of changing the parameters of the pension system in the medium and long term. For this purpose we will consider four options of its development within the framework of two macro-economic scenarios. The first scenario is inertial, assuming average annual rates of GDP growth in 2018-2035 at a level no higher than 1.5%. The second is a basic one, proceeding from the possibility of achieving average annual rates of GDP growth during this period at the level of 2.7-3.0%. For both scenarios four options are considered for the parameters of the pension system:
A — maintaining the current retirement age brackets of 60/55 years for men/women; the preservation of the current pension expenditure levels in relation to GDP;
B — the modification of option A in the conditions of removing the budget deficit of the PRF;
C — the gradual increase by 2035 of the retirement age up to 62/60 years for men/women; the preservation of the current pension expenditure levels in relation to GDP;
D — the modification of option C, whereby an increase of the retirement age will be followed by a growth of expenses on the payment of pensions up to the level of 11% of GDP by 2035.
Our calculations show that in the long term (by 2035) the scenarios for increasing the borders of the retirement age assume a decrease in the number of pensioners by approximately 6 million people. Thus, within the framework of the inertial macro-economic scenario, the elimination of the budget deficit of the PPF will mean a decrease in the expenses on the payment of pensions to 6.3% of GDP in the conditions of negative dynamics of the average annual level of real pensions. A decrease in pensions in real terms will also lead to an additional deduction from GDP dynamics owing to the squeezing of household consumption. The calculations show that in the medium and long term a 1% increase in pension payments in relation to GDP provides an approximate 0.1% acceleration of rates of economic growth.
In general, in the conditions of the inertial development of the economy, the only way of preserving the level of growth of real pensions is not just increasing the level of the retirement age, but also increasing the expenses on pension payments in relation to GDP to levels characteristic for the countries of Eastern Europe.
The elimination of the budget deficit of the PRF, all other conditions being equal, leads to a considerable decrease in the standard of living of pensioners, and also negatively influences the growth rates of the economy.
Considering an increase of the retirement age as a panacea in dealing with problems that accumulated in the pension system is delusional. Even from a fiscal point of view, the benefits of increasing the retirement age aren’t obvious
It is noteworthy that within the framework of the basic macro-economic scenario, the positive dynamics of the real size of pensions is provided in all considered options of the configuration of the pension system. Thus, the rates of economic growth have a key impact on the condition of the pension system.
However, even within the framework of rather high macro-economic dynamics, it is almost impossible to ensure that the growth in the real level of salaries and pensions is consistent without increasing expenses on pension payments in relation to GDP. Such an increase can be made, for example, due to a growth of transfers in the budget of the PRF from the federal budget or at the expense of increasing the volume of insurance premiums (the growth of insurance premium rates and an increase of the base for their collection). The definition of proportions between these sources is a question of economic policy priorities.
It is much more important to determine what proportion of the produced benefits society is ready to redistribute in favor of pensioners without serious damage to economic growth. Our estimates show that increasing pension payments in the long term by 2-3% of GDP is unlikely to cause such damage. In any case, the experience of a number of countries that have a level of economic development similar to Russia’s testifies to this.
This is not just a good report. This, in fact, is the first report in which reasonable figures are specified. I, by the way, wrote that such reform in the current version would not bring any benefits to the economy. Actually, once I knew all the figures (because sometimes I wrote negative reviews of this outrage), but a lot of time has passed since then. But what is surprising is that these figures (not the final ones, which were taken from places unknown, but analytical ones) are also not cited by the supporters of reform. There is the suspicion that this is connected to the fact that they themselves know very well that this reform won’t give anything good. There won’t be either an increase in the income of the budget, nor an improvement in the lives of pensioners (should they live so long), nor the appearance of new jobs.
In other words, all of this reform is frank poppycock, a political joke aimed at destroying relations between the People (society) and the Authorities. The specific aim of this is to overthrow Putin, as our liberals are commanded to do by their senior partners from the “Western” global project. And it is precisely like this that we should treat this reform. It has no relation to economic reforms – neither good, nor bad. It not an economic reform, but a political plot! And it is from here that we have to proceed.
Oh, it is very interesting! Turchak, in reality, said that representatives of United Russia must keep quiet concerning any question until the party clearly expresses itself in relation to this question. So far the party has such a position: in general it is “for” reform, and the details are being discussed. Therefore, no party member should have the right to express their opinion on the details of the reform. From the point of view of politics, the decision is disputable (although Merkel, for example, had even worse things), from the point of view of corporate ethics; the decision is the only correct one. So there are no complaints about Turchak. He in general isn’t a fool (I have spoken with him several times) and he is quite adequate, but he has a problem – he still hasn’t gotten used to the television camera. However, this is acquirable.
Now concerning the media. It should be understood that at the end of the 90’s-beginning of the 2000’s practically all non-liberal media died. Completely. And of course, practically all non-liberal journalists definitely died (only a few dozen mastodons from the times of socialism remain). And the youth that grew from the faculty of journalism are in general totally liberal. They were a little bit suppressed in the middle of the 2000’s, but after Medvedev’s arrival to the president’s post they again blossomed. But then the attack of the State on everything that doesn’t reflect “the policies of the party and the government” began.
And then it so happened that now there are many “patriotic” publications in Russia that employ mainly liberal journalists. An enchanting sight. These journalists (in full accordance with the ideas of Lenin that they didn’t read) see their main task as supporting “theirs” – i.e., liberal-financiers, Nemtsov, Navalny and, so on, and to sully the “bloody KayGeeBee”! And it is this that they are involved in, meaning that, propagandising as much as possible the policies of the government, they optimally irritate the population by using Putin personally. There is just a need every time to act out some disgusting story (how an elderly man died on the way to the polyclinic or hospital, how children were taken away from a large family, how an official or a priest hit a pregnant woman and/or juvenile children with their chic car), to explain that this isn’t just the result of the policies of the liberal power, but the concrete fault of the President, who put on their posts the very ministers and law enforcement officers who encourage all of this.
Of course, the President is guilty, first of all, because he understands that if he starts to cleanse this “Augean stable”, then he will be obliged to shed blood, because they won’t voluntarily give back their privileges. But the most important thing, and this is the essence: the liberal Russian elite today set for itself the political task of removing Putin. Why it decided to do this is an interesting question: if Putin himself and a liberal are flesh from flesh, then this task is stupid and senseless. Not to mention suicidal. But if he isn’t a liberal (it is probably correct to say not a political liberal) then, of course, this activity makes sense. But at the same time, for purely propaganda reasons – because people hate liberals, there is a need to hang the label of political liberal on him.
It is precisely because of this, by the way, that the basic reason for complaints about my articles, devoted to the analysis of the Russian elite and the place of Putin in them. Everyone wants a “left-wing” turn “here and now”, immediately, with the bloody massacre of liberals and gallows at intersections where officials and their grown up children hang. This, by the way, is a measure of the irritation of society, while not very long ago people were ready to be satisfied with only their removal from power. I, as a person who understands a bit about how relations are established at the “top”, see a change in those global tendencies that determine the beginning of this turn. And readers see only a mad increase of liberal bacchanalia. And they for some reason don’t ask the question why is there such an increase in suicidal activity? But it is exactly because the “real” liberals see these same tendencies that I also see – and fear fills their hearts.
There is only one subtlety: it is precisely via this activity that they move society from a condition of irritation in relation to them to a condition of hatred. So defeat can cost them very dearly. However, destroying your own path of retreat – isn’t this the most universal method of increasing animosity in battle?
Excellent article. it debunks the myths (and lies) presented by neoliberal economists that are used in a lot of countries in order to justify redirecting wealth from the 99% to the 1%. The usual trick is not to factor in productivity growth, which is essential for a correct estimation. BTW: There was the same discussion in Germany already 100 years ago, when employers and their economists claimed that the then quite new pension system would unevitably collapse. It hasn’t in all these years. It only got severely damaged by the neoliberal “reforms” sincs the 1990ies.
Did you have a look at the enormous debt European countries are in right now? It’s a card house that will collapse and the pension system is one of the biggest causes for that. Roughly 50% of taxes paid in countries like Germany, France, Austria and so on go into that.
It is not sustainable. And there is no trick here, if pensions were to be abolished taxes could be halved for everyone of the working class.
And guess what people would do then: Create families and raise children well in order to be taken care of in old age, invest in small (family) businesses. The kind of stuff Europeans used to do once upon a time.
I am not sure I agree with your postulate. First of all having pension system is a very humane method of taking care of an older population, which by the way contributed to that system. From your argument I guess that you are not retired and you thing that currently young people will be fully functional and productive until they die. While some will definitely die in their prime some will not and in their old age will require assistance from the society. The key to remember is the fact that what you suggest was possible when people lived on the farm and usually the oldest son, who inherited that farm was responsible for his parents. In modern society, where everyone works in factories or runs their own family business, such an arrangement is not possible, as most of the time everyone just barely makes the ends meet. Even, the fairy tale about successful ownership of a family business is just that. Everyone is in such a debt that there is no money to take care of the elder. Here is an example, on the socialist countries everything was taken care of by the system (government). The rents were chip, food was reasonably inexpensive, and the pensions allowed people to survive, as basically there were not expenses other than food and clothes. Privatization destroyed the humane aspect of life, forcing the elder to live under the proverbial bridge, or shelter while keeping all the possessions in the shopping cart.
Sparta had solution for this problem, when parents could not contribute to the society their son was asked to kill them. Is this what you are suggesting? I guess yes.
I do not believe it is more humane to have elderly people being taken care of by the government and ultimately strangers than by their own children.
Aside from that it is not at all relevant which one of these options is more humane. Every society that has implemented a modern pension system experienced a sharp decline in birthrates that threatens its mere existence.
In Western Europe it is at 1.0-1.4 children per women for native Europeans, which means that after two generations you’ll only see one quarter of the current births.
None of us will keep our countries if this continues and with it our cultures and societies themselves will be gone and replaced by something else.
It is the same way with marriages by the way. You create a whole lot of incentives for women to divorce their husbands (they easily get most of the families property, the children and a large chunk of their husbands future income), and you’ll end up with a generation of children being raised by single moms who never had a male role figure in their lives and therefore often end up in a terrible way.
People want to believe that marriages and traditional families worked just because of love, the same way they like to believe that people are really keen to raise the next generation and wouldn’t stop just because the government promises pensions.
And on a side note: any scheme that undermines traditional families goes directly against Christianity, Islam and all other major religions.
We are not supposed to create a society of lonely cat ladies, degenerate perverts and children raised by single moms
OK, let me ask you one question: Who paid for your education and other social services?
Answer: the people you are trying to deny the right to dignified life till their last day.
This is the least the humanity and civilized society can do to say: Thank You.
Remember, these people paid taxes all their productive life and it’s not their fault that liberal governments squandered all that money, just so now they (the liberals and the neocons alike) can come up with any lame excuse to deny these people what they paid in for.
Remember we are talking about baby boomers, who contributed immense amounts of money to the coffers. the money that was supposed be saved for later use by these people, when they get old. So the idiotic excuse about 1 person working to support 4 pensioners is just that one big pile of bovine $hit.
It does not matter if they all paid into the system and what they consider a dignified life or not when the system is dysfunctional and leads to catastrophic outcomes.
They did not produce enough children therefore there will not even be a discussion about it at some point in the future. You can wish all you want that some system or some ideology must work, reality will bring it down if it is not a sustainable model for society.
And no, these people have children I hope who will take care of them. I do so for my parents. If they don’t they pay the price for their own failures. I don’t think I have to explain how stupid someone must be to expect having a good life in old age without having raised their own children. Maybe investing in that financial paper or in personal pleasure wasn’t the smartest move.
1. The great risk to pension funds (and everyone else on fixed income) is inflation, not a lack of funds or life expectancy per se.
2. I agree that European workers are saddled with lots of taxes. And what have corrupt government officials done with that money? Handed it to private banks either in the form of bail outs or as debt repayment. ie. during the bankruptcy of GM when pension money was handed to JPM and Citibank.
3. I find it quite sad how the elderly are carted off to old people’s homes and forgotten. When my grandfather passed, my grandmother lived with my aunt and her family and we all took turns to visit her and look after her. It is our individual duty to our elders. This should not be the exclusive duty of the state.
4. Grandparents are great babysitters, so this can help stimulate birthrates if mothers can rely on free help at home instead of anonymous state-funded nurseries which are hotbeds of disease.
Corruption is always going on through all times, this will not break a society. In your case, assuming you are not diaspora like I am – Serbias population will by 2030 decline to 6.5 million (without counting the young people emigrating in the future when Serbia joins the EU) while the size of pensioners will double to 25% of the remaining population.
Imagine how much people will have to work at that point only to sustain their elders (doesn’t matter if the gov does it or it is done privately) and upkeep the existing (shitty) infrastructure. And how are we going to defend the remaining territory against Albania which is one of the youngest populations in Europe.
Just think about what resources we will have left at that point. Raising living standards will be unthinkable at that point, we will be lucky if we can hold on to the territory.
And this only because people refused to have children. Anything that interferes with the creation of families at this point must be dismantled, whether it’s no fault divorce, Feminism, pension systems or any other government scheme that pretends to do the job that a family is supposed to do internally.
Regarding care for elderly, if done privately if it is less expensive than if done by the state.
Kosovo’s exponential population growth took place between 1950-1980 during the Tito years. It has now fallen considerably so their largest cohort is 30-60 years old. Today they have twice the birth rate of Serbia but their infant mortality is 30-40 deaths/1000 while in Serbia it 5 deaths/1000. Even by the dodgy numbers provided by the Thaci regime their population is not growing.
I do agree with you that more should be done to support future families in Serbia.
“It’s a card house that will collapse and the pension system is one of the biggest causes for that. ”
Nope, untrue, the current world wide money issuing system is to blame for most deficit problems.
It’s a system based on debt and currency mostly created from thin air not backed up by anything. Each and every ($, €, Ruble, Lei, Lew, Pound, etc.) of these debt based currencies is draining the coffers of their users. Even if the state budget would allow for a total payback of the debt, there wouldn’t be enough currency in circulation to do so, and new currency and therefore new debt would have to be created. It’s a perfect Ponzi scheme.
The system is diabolical and has been emptying our pockets and lining these of the few behind this system since its introduction. These people currently own enough capital to pay all pensions in the whole world with just their pocket money. Compared to their wealth small thieves like Bill Gates or George Soros are poor street bums.
Again, a great article, and one which we in the west would not otherwise get.
So, although it should be obvious to us, I think we ( at best ) tend to forget that they have exactly the same issues and problems we all have.
Russia’s ‘powers that be’ moneyed class, and that class that are trying to gain control over the world are with this issue attempting to divide the population so that ‘they’ can influence power, over whoever ( Putin right now ) maybe in office.
Attempting to prise away the authority of the administration, to set themselves over all administrations.
If Putin does not go authoritarian and crack down internally, ‘they’ will subvert from within.
That is their modus operendi.
If he cannot do this, maybe it is already to late.This issue may clear it up for us all here as to who is really actually in power.
This is an important article.And one of the kind found a lot in the Russian press. Several of my Russian friends (generally all pro-Putin) are pensioners or nearly there.And they have almost all posted comments complaining about this “reform”.So the author is correct that it is a socially divisive issue.Considering the constant stories in the Russian media about crooked officials being investigated or arrested for corruption in the millions of dollars,its a contrast between those sums and the small pensions that people don’t fail to see.And are bitter over.The author’s saying that people are calling for revenge is correct,I see that almost every day.
But the question is, what should be done about the problem.The author’s answer is a good one (though I wish he had talked in more detail about that).But I would add,to stop the outflow of monies from Russia to foreign bank accounts should be a first step.If anyone living and working in Russia (a Russian citizen) would have a foreign bank account of vast wealth.Shows in itself they are cheating their country.Giving forgiveness or tax exemptions to crooks to return their money to Russia ,(1) Doesn’t work well.(2) Gives people the sense if you are rich and a criminal the government will forgive your economic crimes.There is no deterrent there. Since the wealth they have is produced in Russia.Cutting off the sources of that continuing wealth should be a first priority.And if they themselves are in Russia.Arresting them for their crimes should also be a first step.Forcing those people to pay for their crimes,would be a good “object lesson” to anyone else trying that.And would show the “people” that the government is serious about stopping the theft of Russia’s wealth. Not doing that sends the opposite message to the people.And when you are trying to push an unpopular reform onto people.That isn’t the kind of message you want the people to get.
How many children did your Russian friends raise? Even if they did reproduce, on average the birthrate all over Europe including Russia is abysmal and creates conditions that makes these societies not sustainable.
You seem to believe that it is all about wealth and personal pleasure, but a nation that wants to survive into the future has primarily to make sure that new generations are raised without interruption.
If for 1 pensioner 4 young persons are working and paying into the system then it can continue, if for 1 young person working 4 pensioners have to be sustained then the whole thing will crash.
The pension system cannot be sustained anywhere as any nation that implemented it experienced a hard crash in birthrates. People prefer personal pleasure over the work of raising many children and staying with the same husband/wife if the government promises to take care of them in old age.
If people in Europe continue to not have children then there will be no European societies in the future. Neither Russia, nor Germany or France. We will simply be replaced by immigrants if we continue to lie to ourselves that we do not need children to take care of us when we get old.
The pension system needs to go the same way Communism had to go.
If for 1 pensioner 4 young persons are working and paying into the system then it can continue, if for 1 young person working 4 pensioners have to be sustained then the whole thing will crash.
According to your math each generation needs 4 young persons to sustain the pension system. When those 4 persons get older you’ll need 16 young persons to pay their pensions. When those 16 get older you need 64 young persons to pay their pensions. … This will lead to an exponential increase in population. Your proposal is the best way for future genocides or World War.
Excellent resource about a big issue domestically, weaponized to undermine Putin. Already has knocked his popularity from the 80’s to the 70’s in opinion polls.
The haters of Putin also have jumped on the appointment of Yeltin’s son-in-law as an adviser.
So, swiftly, following his grand success in the presidential election, the war is on to cripple his six year program of domestic reform and development of the economy.
And along comes Trump, arranging a summit for July. You can be certain Trump will also arrange an “event” that show US strength and Russian weakness that makes headlines.
With the so far failure to disrupt and muddy the World Cup, you can sure that the lunatics in the West, encouraged that Trump loves spectacular shows of strength, will concoct something to make Putin look weak and distracted right before the summit.
It is widely stated, including by Khazin, that the Yeltsin clan and its close allies largely dominate or own the Russian economy. That may be an exaggeration, but appointing a son-in-law strikes some of us as being tone deaf. What is your read of the power of the Yeltsin clan?
More fundamentally, is Putin actually trying to reform the economy and does it seem like any progress has been made or is likely to be made? The country should be very rich just based on resources, and that is without the good scientific skills found within society.
We have been waiting for non-liberal economic policies for quite some time. They never seem to come, not even experimentally. So perhaps we have to reevaluate our position. Perhaps Putin is an economic liberal or perhaps there has been some kind of deal that Putin could handle security matters but not economic ones.
And then we get to the issue that all the liberals, pro-Westerners, and people who want a collapse of the country for some reason need to be stopped, or else Putin’s popularity and authority will decline significantly. The only cure for that is biting the bullet and doing something about the economic and social justice problems. Making oligarchs happy won’t work, and neither will making taxes more regressive. There are citizens who have never known a non-Putin Russia. Saying he saved the country in Chechnya or the Crimea won’t keep popularity when liberals run wild, which is their normal state.
And one imagines that a high percentage of the more “patriotic” complaints against the Kremlin when it comes to things like the Ukraine would not gain nearly as much traction if it didn’t actually look like the Kremlin is infested with pro-Western liberals, as seen on the economic front.
I get your point totally, but I also think that Putin has to deal with the group of people who controlled the Soviet apparatus, who later turned “liberal”, who always belonged to “Trotski’s” club, hence they work with NY. His first move after he got “posted” to the position of premier by Yeltsin was to reorganize the military, which if I am not mistaken took no less than three steps. Finally Shoygu is doing the job. So, yes sometimes he looks very liberal to me, but even being liberal he can be Patriot. Regardless, he has to work within the system that exists since basically 1905. He has to take small steps, or there will be no steps.
when I saw the news on TV, including the protest in russian streets (during the World Cup!!!), I remember the fifth column issue immediately…
that’s totally crazy… unbelievable!!!
Nice detective work. Keeping these people around, “being practical”, has its consequences. Something has to be done to show liberalism is the problem. Vesti news put out a story recently about “revitalizing an industrial town.” The plan includes a walking bridge designed by an “artist” to look like a conveyor belt, apartments, and shopping complexes. How about, instead of revitalizing, they re-industrialize the town. How about real conveyor belts so people can afford houses, and families. This instead of wasting money on cheap junk and keeping money laundering ops/shopping centers alive. Can’t believe Russians are falling for this liberal crap.
Also notice the number of animal predictions those sweet little lovelies at RT keep promoting vis-a-vis the world cup.
Pension ‘reform’ is not going to happen in it’s proposed form. Everyone in the Russian integrationalist camp is coming up with foolishness and trying to slip it in during the football championship mess, hoping they can get this or that idiocy passed while everyone is looking in a different direction. Screw them, most of the citizens are not fooled by their actions, football means nothing to the vast majority in this AO and the populace is not only watching these fools but may well be choosing suitable lamp posts and gathering rope for a little neck stretching of needs be.
What many fail to understand is President Putin is not the Czar, and even Czars did not have absolute power since Ivan Grozni, plenty of them have not lived to old age. VVP has to husband his strength and fight the battles he can win. I’m not worried about what is promulgated during this summer, I’ll watch what happens in fall and early winter, that’s when we’ll see how much of this ‘pension reform’, ‘amnesty for returning money’, ‘slaps on the wrist for stealing millions’ and such little foibles continue to fly. My bet is most, if not all, will not fly and there’s going to be a whole lot of sore butts by early winter, including in this charming little village.
VVP has a very full plate. In case none of you have noticed, there is a steady progression of Russian military assets quietly transferring west, gathering near, but not on, the borders and seas on Mother’s west flank. Even the little Caspian Sea Flot, that would be the little Flot that kicked the puppy snot out of the bad guys, including CehSha, in Syria in late ’15, has transferred units to both Sea of Azov and the Mediterranean Flot and has but a thin line in the Caspian Sea as of this date. Obviously, VVP has brought the fractious entities surrounding the Caspian to heel, so much so that he can strip that Flot of assets to protect the Russian west flank from what looks like coming conflict.
One needs to stop taking every breathless report of the coming doom of VVP as anything but integrationalist bovine scatology, step back and look at what is really happening, not proposed idiocy and wishes. Actions speak louder than words and the fact the Mother is arming up to the west means Mother knows more than we ordinary workers and peasants know. Let’s just hope that if President Trump’s handlers allow him to meet with President Putin, something good will come of it. If not, well, y’all better stock up on ammo, MRE’s and AW, and remember to look at the ‘use by’ date before you buy, ’cause there’s a good probability you’re going to need them goodies.
Never The Last One https://www.amazon.com/dp/B00ZGCY8KK A Deep Look In To Russia, Her Culture And Her Armed Forces
An Incident On Simonka https://www.amazon.com/dp/B01ERKH3IU NATO Is Invited To Leave Sevastopol, One Way Or The Other.
War, before it happens, always seems distant, and very illogical. But war is waged for economic reasons, not ideology. Though ideologues always support wars. And the US and the EU are in big economic trouble.
Today, in Eastern Europe, the Baltics, and especially, Ukraine, Moldova, Poland, we have all the gunpowder and fuses for war. And loons from NATO and the former USSR wastrel states clamor for the conflict, thinking Russia can be bashed by the US using NATO and the millions of nazis and criminals among the citizenry of the vassals.
Gunpowder, fuses and psychos with matches–that’s the state of things on the West of Russia right up to its border from Arctic to Azov and Black Sea. Bad things are a spark away.
The Summit of Trump and Putin will have to remove the gunpowder, fuses and psychos or Russia will have to do it. As Shoigu said in Crimea at the military conference, it would be a symmetrical response to the West’s moves. Think that one through. I would guess Donbass 2014-15 times 100-fold. 500 kilometers of nazi and NATO-free space.
Russia just brought back 11 aircraft from Syria. Since they also just began a very intensive air operation in Southwest Syria, they felt the 11 would better serve in the West of Russia.
We just don’t know. But the clues are scary.
Trump will hear it in person. And he has elections in November. The last thing on his agenda is war he can’t win. Putin will be demanding, not end of sanctions, but end of the threat. ‘Or else’ is already planned by Shoigu.
Larch, you forgot the southern Europe, namely Balkans. Albanians are itching for the fight. Today I read, that Kosovo and FYROM are on hold by the nato. What is nato wating for? Conflict? Maybe. I thought that this hole mess about Greece giving in to renaming of FYROM was going to pave the way to EU and nato membership. Hmm, interesting.
re: “One needs to stop taking every breathless report of the coming doom of VVP as anything but integrationalist bovine scatology, step back and look at what is really happening, not proposed idiocy and wishes. Actions speak louder than words”
Military maneuvers are easy to do, whereas economic policy changes are real actions that show where a country is headed.
Aren’t the integrationists something like 50% or more of elite society? They are serious as a heart attack, and it is only the inability to cut a deal with the West that has stopped friendship from developing. If and when a deal can be cut, look forward to all kinds of wonderful Western phenomena spreading in Russia.
The 1st thesis is demographic, based on the fact that the working-age population is rapidly decreasing …
This point had been told Europeans over and over again. Remember WW II. For many nations this war meant a rapid decline in the working age population. The Soviet Union recovered as did many other countries. I’m pretty sure in today’s Russia factories are equipped with some nice gadgets that weren’t available a few years ago (CNC milling machines, CNC turn tables, robots, etc.). With automation you’re increasing productivity as well as relieving workers off manual labor. Probably pickaxes of Russian miners got replaced by state-of-the-art equipment. Nowadays the same amount of work can be done with less employees. With continuing automation you’ll rather face the problem of too many people for too few jobs. One way to solve the problem is to reduce the working hours per week or to implement schedule where employees can choose the amount of hours to work, the daytime for doing this work and the day itself. This solution can not be implemented for each job, nevertheless could this be a start. The only ones opposing such an idea may be company owners and/or shareholders. Usually an increase in productivity per employee shows up in a few bucks more on their bank accounts.
The deeper issue with any kind of pension system is that there is a causal connection between it and very low birthrates.
Europe has to import millions of foreigners of all kinds in the hopes that they will support the pension system in 10 years when all the boomers have left the workforce. The result: the old establishment is being decimated everywhere you look.
The sad truth for most of humanity has always been that greed and selfishness trumps everything else, if you remove the need to create children in order for them to support you in old age then a significant portion of society will stop doing so and instead pursue other selfish goals.
I’ve heard this so many times from friends and acquaintances: We don’t need to have children because we have a social system.
Russia and in fact every Western country must dismantle all pension systems to the point where it only guarantees survival, but nothing more.
That’s in my mind the best way imaginable to turn around the catastrophic demography in Western countries and therefore I think it’s a good thing for Russia to implement this policy.
It’s one important piece to get Russians to create large families again. It will strengthen Russia as a whole in the long run even though it will hurt many in the near future, but you can’t make everyone happy and happiness isn’t the primary goal of a nation anyways. It is survival.
Europe has to import millions of foreigners of all kinds in the hopes that they will support the pension system in 10 years when all the boomers have left the workforce.
Maybe we should start cutting pensions with the boomers. Finally it’s the boomers who didn’t have enough children to support their pensions.
I’ve already written some comment about the increase in productivity (Anonymous on June 25, 2018 · at 5:49 pm EST/EDT).
People should never forget that we live on a finite planet. I recommend to watch videos of the presentations Hans Rosling held about the topic population growth. He came to the conclusion that the amount of children is higher in Third World countries due to the higher mortality rate of children.
Why does everyone think that we need growth? Is population growth less selfish than financial growth (as a result of more consumption)?
If the numbers didn’t change in the past few months about 40 million US citizens are on food stamps and some got kicked out of that program. I doubt the birthrate in several US tent cities is higher than in the rest of the country. (I’m aware that food stamps are something entirely different than pensions. Nevertheless show 40 million dependent people that the US is far away from full employment, Employment in turn is the basis for contribution to the pension system.)
Didn’t Putin say that he would never allow the pension age to be raised?
as far as I remember he said that in 2005. A lot of time has passed since.
but yeah, he did say that…
I dont think so – I’d like to see the link if it’s supposed he did say that. What I did hear him say a few years back was that he didn’t want to see it raised, his words were “it’s not good, you work all your years, and then you have to go to the coffin”. But he also added, he could see it would come, that it would be inevitable, but he would like to see it deferred for as long as Russia could afford it.
Its quite easy to find what VVP said in 2005. Both Jiri and The Saker are correct. Here is just one sample from the net in English:
(please note the link to the youtube 2005 statement is in this link if you click on the source under Putin’s 2005 statement)
It is Peskov who has explained the current state of affairs (Putin has not commented) and stated that President Putin is not involved in the discussions of the new reform, as it’s being developed by the Prime Minister Dmitry Medvedev’s cabinet.
Isabella, the commenter has posted the link – the video evidence of what Mr Putin said in the link provided – as described above. I have checked this and there is a youtube video there of what Mr Putin said in 2005 – please stop this now. Mod
All I said was that I meant a link to a direct “from the horses mouth” source.
I do not find a link to a small, unheard of publication as acceptable. After spending time in science, you learn about something called “provenance”.
Removed. No need to patronise other commenters or The Saker. Mod
Consequently, this is not a supportive evidence that Vladimir Putin every actually said these words.
I also added that I dont’ see anything significant in that Medvedev has been tasked with doing this. He is Chairman of the Government, and I assume it’s his job.
I would again ask, do you have a link which goes directly to Putin making the statement, that he would not allow a change of pension age.
I have my doubts because, apart from his response to Andre Kondratiev interview that there was “no circumstance or reason he would ever countenance giving Crimea back to Ukraine”, he is almost never so committed. He chooses his words and phrases very carefully. He was even open on the possibility of altering the Constitution sometime in the next 6 years, not for his own continuation, but just that, in 6 years anything can happen, and he wont commit where he knows he cannot for sure see what may come.
If you are not into censorship, but are into honesty, please print this.
I too, went to the video link.
It has no English subtitle.
If you use the “auto-mated” it is either so bad that the jumping, cutting mean that the words are incoherent, or it has been interfered with to make it look other than it was.
It only clearly says says “I am against anything …..retirement age… while I am President .. there is no need”.
Australia had a brilliant pension scheme, which worked very well, introduced by a Labor Government after WWII – 1945.
It was a forced contribution via a 7% tax hike, raised to 7.5% the following year. But it was run by a private and very successful pension fund.
IN a few years it accumulated a huge sum – which frightened the Tories of Australia. First Menzies then Fraser raided it, and closed it down, with the memorable phrase “the Government will always look after you”.
It has been calculated that, had they left it alone – it was completely unprotected from Government by Constitution for example – the majority of pensioners would be in receipt of about Aus$1000 a week by now.
Instead, they get barely $400.
The average wage to live in modest comfort in Aus is $50k. Pensions get about 20K. Many are dying of malnutrition or expating to live in cheaper countries.
That’s what happens when you try to pay a pensions from Consolidated Funds – which I assume is what Russia is contemplating.
Introduce a privately, market based fund with taxed contributions and it has a great chance of doing well, and being totally accepted, I would think.
I find it odd, the number of things people try to use to smear Putin with.
They never give up, though.
Hmm, privatization is the favored dead horse used in the West that’s supposed solve all the ailments of anything that government does. Actually, as the history shows anything that got privatized jumped in costs number of times, while the service quality dropped significantly. As it works currently, those senior homes grab peoples’ houses as well as their pensions. On the other hand, western governments are known to squander all the pension funds because they invested that money in the ‘iffy money laundering schemes”, which collapsed in the 80’s and later in 2008. Those markets never recovered, hence all the BS regarding too many pensioners eating up all the dwindling resources. Never mind governments gambling. I still remember, the days when I went to the bank complaining that my investments were supposed give me no less than 27%, while consistently I was seeing -3%. Bank promised to prove me wrong, and week later after “sever number crunching” their computers could not prove me wrong. So I cashed my certs and run away before they could steal the rest of my money. This is what happened to all the pension funds everywhere in the world and I am going to repeat: Now they are trying some lame excuses to take the rest of the money from the pensioners.
So, to finalize: Governments should have invested that money in their own operations, which actually never lose any money, and as the history shows: the government corporations consistently have very good yearly returns, which actually reduce our taxes, while privatization fills up private pockets and increases our taxes.
The private scheme wasn’t “privatization”. The private superannuation fund company – and there are many doing very well in Australia – was already in existence. It was simply given to them to run. And the “proof was in the pudding”. It was making billions – and would still be by comparing what it and others are dong now. Being stolen by Tories and trying to pay pensions out of Consolidated Revenue is what ruined life for retirees. No government can ever make enough money from taxes to do this – it has to make the money from investment in infrastructure and international markets. It has to grow – tax growth is limited. Also no government can be trusted to have the best interests of the payers in mind. Today, under orders from Washington, the Australian Government has spend billions ordering “drones”, while pensioners starve.
To use a private scheme was shown by Australia to be the only way to go. By the way – they’ve re-instituted it with some amendments, since.
OK, I get your point, but what I meant by privatization was the sell off of all public owned corporations.
Let me approach this from socialist point of view. Government can not provide any services without an income and, like you are point it out, taxes can’t fill the requirements. I suggest stopping privatization and investing in money making corporations to increase source of money available for public use. You see, public corporations transfer all the profits to the public coffers, this is how it works. What you are saying about private investments proved to be a huge failure in North America. We witnessed hundreds of billions of union dues, teacher’s and other government pension funds flushed down the “money swindler toilet”. Then the BS, that Anon above is trying to tell us started to surface and repeated at nausea.
I am going to close with a comment unusual for this kind of blog, which is system control and stability, which is described by number of mathematicians like my favored Nyquist. Life is a system, which needs to be controlled, and since I spent all my life working with control systems, I could see many parallels.
Thanks for your response – regarding you wishing to apply the work you have been engaged in to “Life” I couldn’t disagree more.
Systems controls work where you have simple systems. But Life is not a simply system. It is infinitely complex and understood hardly at all by us. The Egyptians seem to have understood it better.
All we can do – or indeed have any right to do – is make a loose, wide, infrastructure which operates to protect us from each other and the worst of the elements, and let everything run according the Natural Laws from there. Let us, as people, determine our lives.
I truly do believe that it’s the aim of people who agree with you – that they can control all aspects of life and people, which has led to the utter mess we have now.
How will raising the retirement age help. This would only increase unemployment, as older people would work for five years longer, from age 60 to age 65. This would keep younger people from taking advantage of any job openings vacated by retirees. By the way, who would want to hire an unemployed 62 year old?
If Russia would like to increase the birth rate, it needs to encourage the formation and preservation of traditional families. Employers should pay a man a generous enough salary in order for the mother to stay home and raise kids. Imagine if an entire family could live comfortably on one income. Imagine that there would be many job openings as a result of millions of women leaving the workforce.
The American elites have taken $50 trillion dolllars and then claim that the social security trust fund is broke:
Has anyone considered that the Russian elites may have stolen the Russian pension money? Russia is, after all, in a state of war. It needs to compete with the USA in space.