It has been close to a year since the 2018 March presidential elections in Russia, which saw Vladimir Putin enter his fourth term as president. Shortly after, the President, whose approval rating had been monumentally high (89% at its peak in 2015) after Russia’s takeover of the Crimea in 2014, introduced a new law for Russian pensions, quickly losing a large portion of the support that initially brought him to power.
On June 14, amidst the opening of the World Cup, Prime Minister Dmitry Medvedev announced the unpopular pension reform that would raise the retirement age of Russian citizens, in echoes of Jo Moore’s ‘good day to bury bad news’ on September 11 2001.
The original plan, since revised as a result of the outcry across the country, was to raise the age that people are able to begin receiving their pension to to 65 for men and 63 for women. Previously, this age was set at 60 and 55 respectively – comparatively low by European standards. The United Kingdom’s current minimum retirement age is 65 years for both genders, with projections to begin a gradual increase to 66 years by 2020, and Germany sets a minimum at 67 years old for those born after 1964 (those who would be eligible for collecting their pension in 2031 and later).
The Russian pension age is planned to start gradually increasing next year, rising until 2028 for males and 2034 for females.
The prospect of increasing the retirement age has been on the government’s table for years, but is only being acted now as Putin sees his constitutionally last consecutive term as president.
The number of workers has been gradually decreasing as a result of a demographic dent currently hitting the population, which is a direct consequence of the 1991 collapse of the Soviet Union – it’s chaos and economic impact meant that the birth rate plummeted.
In contrast, the number of pensioners is steadily rising, which the working population aids with taxes, a portion of which are used for funding state pensions, aid and care for this portion of the population. Previously, in 2002, one pensioner used to be supported by approximately three workers. Now, however, with the dent in demographics, this ratio of pensioners to workers has fallen to 1 : 2.3, which upsets the system’s balance and has put Russia’s pension fund in a deficit. Currently, the system is draining money from the federal budget in order to sustain itself, putting the country at risk of not being able to fulfil all necessary retirement payments in the future.
How did Russians react?
The public outcry that arose in the aftermath of the announcement was fuelled not in the age increase primarily, but in the new pension age’s proximity to the average male life expectancy – just 66 years (largely due to high alcohol consumption. Both men and women across the country were shocked by the sudden increase that leaves many with only one year of receiving government pension. Around 40% of men and 20% of women may not live long enough to claim their pensions. Armed with slogans such as “не доживу до пенсии” (““Ne dozhivu do pensiy”, or in english, “won’t live to my retirement”) citizens took to the streets, bearing banners and organising petitions in attempt to influence the Duma’s decision.
During his speech on August 29, in which the President took responsibility for the decision for the first time, Vladimir Putin announced that the retirement age for women would be revised and lowered to 60.
“In our country, there is a special, gentle attitude to women” said the President. He proposed further measures to the bill, such as criminalising age discrimination when hiring on dismissing workers 5 years away from the age of retirement.
During the address, which was broadcasted to the Russian public via TV and radio, the President also responded to the significant backlash his government received by explaining that the reform is being put in place in order to “ease strain on the public budget by enabling the government to reduce subsidies to the pension fund”. Essentially, the government is promising an eventual increase in the value of state pensions, which currently averages around 12,000 rubles, or just under $200 per month. According to the Financial Times, the government aims to raise Russian pensions by 40% by 2024, the end of Putin’s second consecutive presidential term. Although for many this growth in pensions will be monumental, the government still has a long way to go before pensioners can afford to live comfortably in larger, financially strenuous urban areas such as St Petersburg or Moscow.
The amount gained from the initial proposals was forecast to surpass 3 trillion rubles, all of which would then be used to increase average pensions in Russia to about 20,000 rubles (just over $300) by 2024. However, with Putin’s amendments, the government forecasts a 2.5 trillion ruble gain, meaning that an extra 500 billion rubles would be transferred from the government’s expenditure budget to compensate.
How has this affected Putin’s presidency?
Since the reform was put in place, the President’s approval rating has slid to its lowest point in 4 years, likely as the source of the majority of his support is conservative and older citizens. According to a poll conducted by the independent sociological Levada Centre, a Russian non-governmental research organisation, since November 2017 public trust in him has reduced by almost 20 points; in the 3 months from April to July alone, Putin’s approval rating had slid from 82 to 67. In an attempt to win back support, which largely consists of the rural population, Putin introduced further amendments to the original proposals passed in the Upper Chamber, promising an additional 25% margin to the state pension for village citizens who have spent over 30 years working in a village household.
Even today, months after the announcement took place, the Vladimir Putin’s approval rating has struggled to surpass the mid-60s. Despite a decrease in the initial amount of protests throughout the country, Putin was only able to win back a small portion of lost supporters in the past few months.
In his annual New Year’s speech to the Russian public, he promised to address a “long list of pressing issues in the economy” and other sectors, as well as improving the “wellbeing and living standards” in the country, encouraging Russians to stand side by side with him and the government in 2019.
Despite Putin’s claim in the earlier stages of his presidential career to refuse such reforms, it may seem that he has decided to dedicate his supposed final term to giving the Federation the ‘tough love’ that he believes its benefits system (and economy) needs. His recent high-margin election win may have encouraged him to finally face the pressing issue shelved for years by the government, perhaps inadvertently stumbling upon the issue on which his potential final presidential run will be judged.