Many People Are Forced to Retire While Still Able to Work

A year ago I was looking for a birthday card for my mother. I wanted it to have the number “70” on it. I searched in all of Moscow’s stores. There were tons of cards for special “round” birthdays: the 10th, the 25th, the 40th… The “oldest” card, however, was only 65.

Luckily, not long before Mom’s birthday I was going to Sweden. And there I immediately found exactly what I needed: a musical birthday card with the number “70” on the cover and a cheerful birthday song inside. But the funniest thing was that this was the “youngest” card in the store!! It was followed by 75, 80 and all the way up to 100.

I drew a simple conclusion from this story. Russian birthday card buyers probably were guided by the average numbers for life expectancy in Russia. And these numbers are obviously lower here than in Sweden. Secondly, they were probably thinking that whoever manages to live a bit longer will not need any birthday cards. They should be happy if they get a package of tea or a box of chocolates for their birthday. And in Sweden, if you judge by the display case in the gift shop, life only starts at 70. And this really is true. We all know perfectly well what the average age of a Western tourist is—it’s 70!

At the same time, statistics show that Russia is the most quickly ageing country on the European continent: in the last 15 years, the ratio of working Russian citizens to the number of retired pensioners has decreased by 1.5 times. As you might have guessed, this does not mean that care for pensioners has improved and thus their life spans have increased. This only proves the terrifying death rate in Russia (primarily for males) for people of working age. And this situation only aggravates the situation with pension payments.

Amazingly enough, even Ukraine has surpassed Russia in average pension levels! Just some ten years ago Ukrainian senior citizens envied their Russian counterparts: the average Ukrainian pension back then was equal to ten dollars, while in Russia it was 30 dollars. But now the picture is different. Today, the average Russian pension is equal to 150 dollars. The average pension in Ukraine is also 150 dollars. However, this means that in the same amount of time Ukrainians have been able to improve the conditions for their pensioners by 15 times, while in Russia pensions only grew fivefold.

By the way, great progress in the Ukrainian pension system is tied to Yulia Timoshenko’s ascent to power: during the first days in her post as the prime minister she increased pensions for the Ukrainians who have outstanding accomplishments (for example, great length of work service, medals, etc.) by almost double!

Russia also has its own “Yulia Timoshenko”—Moscow mayor Yury Luzhkov. He takes great care of Moscow’s pensioners. Moreover, in Russia’s capital pensioners have a 50 percent discount for all utility bills (housing fees, electricity, telephone), and they don’t pay anything for use of public transportation. No other pensioners residing throughout Russia’s vast territory can even hope for anything similar. They live in terrible poverty and barely make ends meet with their diminutive pensions.

What can the state use to increase the pensions, though? Sure, Russian businesses pay the Integrated Social Tax (ESN), which goes into the Pension Fund. But this money is meant for payments not only to the current, but also to the future pensioners, which means it can’t all be spent right now. Moreover, the total sum of the ESN decreases each year—because the number of working Russians decreases.

All of this means that the Pension Fund doesn’t have enough money to pay the pensions. Twice already, this shortage of funds was compensated from the state budget. But this is an exception rather than a rule. The Russian government refuses to make budget injections to the Pension Fund a regular measure. The budget has money today, it says, but what if it runs out tomorrow?! The government suggests looking for other solutions for this situation. For example, to increase the age of retirement. To make it 60 years for women (currently it is 55) and 65 for men (currently it is 60).

This would be the most effective measure. However, it is believed that the population will be apprehensive about it—especially the male population. After all, with low average life expectancy, many men will simply not live to retirement.

Incidentally, I personally do not understand this argument. I think that the situation in Russia is often the opposite: a person is forced to retire when he or she is still very capable of working and then quickly dies in retirement simply because he is not able to survive the stress of this new, unusual situation of idleness and uselessness. This is especially true for former executives.

And still, Russia stubbornly refuses to accept the recommendations of increasing the retirement age in the country, while there are really no other rational and realizable recipes for raising the living standard of pensioners. This means that in the next few decades their situation in Russia will continue to be disastrous.

Yelena Rykovtseva is a correspondent for Radio Liberty. She contributed this com