Putin’s Pension Plan Driven by Demographic rather than Financial Problems

Paul Goble

            Staunton, September 6 – Most discussions of Vladimir Putin’s plan to boost retirement ages have assumed that he has been driven to that by the need to save money, but in fact, a new analysis says, the plan is less about that than about finding new workers for the Russian economy without bringing in immigrants and the problems they represent.

            The pension plan once it is approved will not save Moscow very much money, certainly not the amount that some Russian officials claim and that many assume is the reason Putin has taken such an unpopular step, according to newly released budget figures for the coming three years (sobkorr.ru/news/5B9126AED4912.html and kommersant.ru/doc/3732806).

            Indeed, the current retirement ages could have been maintained for a decade or more without serious problems for government finances.  The changes were driven by the authorities’ need to increase the number of workers” without increasing immigration, the articles report.

            According to new government figures, boosting the retirement age will increase the number of Russians employed in the economy by 137,000 people by 2019 and 1.8 million by 2024, the latter a number that will go a long way to compensate for the demographic decline in which Russia continues to find itself.

            That conclusion explains two other things as well: On the one hand, it is why the government has not been willing to back down because demography is much less unforgiving as far as the country's economy goes than is any budget shortfall caused by pension costs.

            And on the other, it also explains why Putin made the concession to women, whose rate of participation in the work force is less than that of men and whose earlier retirement than originally projected will affect the size of the workforce commensurately less.