Elena Popova: “We should prepare younger generation for the future pension”

Tribuna’s guest is the senator of the Volgograd region, a member of the Federation Council Committee on Social Policy Elena Popova. She discusses with Vladimir Nesterov social policies, including the pension reform.

- Recently, Anton Siluanov commented on the accumulative pension system. What do you think, what is the future of the accumulative system?

- We originally implied that the employer pays a certain amount to the Pension Fund for the employee. That amount consisted of two parts. An employer sends one part to the insurance part, that's 22%. The second part is much smaller, only 6%, and it is directed to the accumulative part. During the last two years, people might have noticed, representatives of small and medium-sized businesses mainly noticed this, that the size of the insurance contributions paid to the Pension Fund have changed. We stopped paying money to the accumulative part of the amount, and the previously paid sum of 22%, as before, is now fully sent to the insurance part. And the state at one time offered employees to write an application so that they could continue to send the 6% to the accumulative part, but only at the request of the employee. 

We all know that people in Russia always had a "wait and see" attitude, always looking at its neighbor before making decisions. Therefore, the so-called "silent ones" who did not sent any applications, did not write and did not fill out forms, were in the majority. And today we say that the accumulative part is frozen. It is not used, it is not replenished, as we found out. Because those very "silent ones" have not expressed any desire. "Vnesheconombank" manages those funds. At the time, it said "let's do it, we will repeat the used opportunity, this time so that we could invest funds that citizens have invested in the accumulative part." But such a decision was not taken. And today we are talking about what we will do next year. I can tell you that at the last meeting of the session, we addressed the issue of the budget for 2016-2017. And we discussed that, before the middle of July, every senator has the opportunity to submit amendments to the federal budget. And concerning the insurance accumulative part, opinions were divided. The Ministry of Social Protection believes that the accumulative part should work. And in the budget we see that those tools, which will be sent to the accumulative part, are included, and maybe they will be transferred to private pension funds later. Why there? Because we see that, unfortunately, the percentage of those contributions to the accumulative part of a pension are not replenished very well. Because probably they are not placed very profitably.

The government policy today is aimed at offering private pension funds, which have passed all the requirements, which State gave them, have received accreditation, confirmed their intentions, entered in the register, in other words, gained some credibility. So today it is time when they will recieve the funds of accumulative part. And then the state, in the form of transfers, will give sum of falling income to the Pension Fund. At the least the mechanism for 2016 has not been changed in the budget. Will it be changed after the adoption of the federal budget? Maybe. But it is high likely, that the mechanism will remain the same. That means that the accumulative part will work. 

Today, opinions were divided. We understand that with the adoption of the budget, there should be only one opinion. Most likely, the calculation of amount of 22% and 6% will not change, and whether the accumulative part will be defrosted or it will remain unchanged for 2016, we will see only after the adoption of the federal budget.

- Will the situation be between the "silent ones"? Will it be more profitable for them to invest in the accumulative part of a pension or nothing will change for them?

- If we create conditions for them, under which it would be profitable for them to invest in private funds, or come and simply write applications, state their will, then there will be a movement. Today, we look at accumulative part, which is in a frozen state, and in fact, does not belong to the employee. Because it is not paid by him, and as we have said above, by the employer. That means, he did not felt this sum as a minus to his salary, because the obligation to pay pension fund - is a duty of the employer, not the employee. The employee only sees the personal income tax as a minus to his sallary, which is a minus, and he feels it. 

Our working citizens do not have much of a difference, where his funds are - in the insurance part or accumulative. And until the time to retire comes, he is not puzzled by this problem. 

Therefore we are saying, that the policy of attitude to their future pensions, which our Western colleagues are forming, probably should be carried on our Russian. Because it is correct. Initially we have to prepare for the future pension the younger generation, which has just come and for the first time comes to do some work. At this age, young people should think about how much benefit will be invested to their retirement savings, whether they are funded or the part of insurance, it does not really matter. 

There are still some citizens who have expressed their will and made their statements for the non-governmental pension fund. And, we can tell you that each of such a potential retiree tracks his savings, looks for profitability of his contribution at the end of the year. As a result, he develops a picture, whether there is a  sense to keep his savings in this part, or transfer it to the non-governmental one or governmental fond. So we say that the culture, the behavior of our citizens who will sooner or later become pensioners, should be formed as soon as possible. And if today we simply publish any new legislative act and oblige everyone  to decide before January 1, 2016, in particular, if we are talking about those "silent types", we believe that there won’t be any major changes. Because the funds, as before move into VEB, where they are today, and. Either they will go partially to the private pension funds. Therefore, in our opinion, it is necessary to consider the mechanism that will make incentive for the declaration itself, so that we can already offer to our citizens.

- A lot of talks is about raising the retirement age. Most recently, the Ministry of Labor has said that there will be a freeze until 2020, then it is likely a gradual increase in 3 months, 4, 5 of a retirement age. How do you feel about that? Do you think whether it is worth to raise the retirement age in Russia?

- The question of raising the retirement age, of course, has been debated on many platforms for a long time. Once, when we were visited by the Head of committee on social policy of the Minister of Health, Veronika Skvortsova, and we asked her this question. And we got a response from her that, firstly, the state should create conditions for increasing life expectancy. Today we have, unfortunately, short duration - 71 year. If we compare the other countries that offer a later retirement - 63-65 years old - its citizens, so we can see their average life expectancy. And this age is very high there. Approximately 85 years old.

And in Russia there is no gender equality, but there is still a big difference, say, between the survival of men and women in retirement. And if we are talking about men, the median age of survival is five years. It is very small. That's why we still tend to the fact that in the upcoming years the state should develop a package of documents to increase in life expectancy. We see in recent years  the creation of health centers, the organization of new medical clusters, which suggests that we have begun to identify a larger percentage of diseases in the early stages. 

So if we create a life expectancy on average somewhere around 75 years, then, perhaps, we still have to go to the offer of our government in terms of incremental, gradual, say, about three months a year with increasing age at retirement . Some, as you know, offers start from our public servants. But again, we were not looking for a lifetime monitoring of our public servants. Because they are just as other residents of the Russian Federation. Therefore figure belonging to the work, whether it is a state office or small business - it is not the criterion that we must take as a basis. The criterion here should be the one, the increase in life expectancy at least 75 years. Therefore, we do not think that in the coming years there will be taken some drastic changes and the period of retirement will be increased.