Valery Ryazansky: "There are no other problems in the pension system apart from low wages"

The guest of the program ‘Tribune’, the chairman of the Federation Council Committee on Social Policy and the Senator from the Kursk region, Valery Ryazansky, sums up the results of the spring session of the upper house of the Russian parliament. 

-Valery Vladimirivich, issues of changing the retirement age were actively considered during the spring session. What is the probability, in your opinion, that it will be increased after 2020?

- The probability is high. I want to say that the discussions are becoming more focused, and the fact that the President urged everyone at the negotiating table to lead weighted sensible arguments added a constructive approach to the discussion. We are against discussions which lead to only one single issue of the retirement age, based on the economic perspective. This is the wrong way. We need to look at a wide range of issues during discussions. What is this social group of people who are going to retire? What is the condition of their health? What are the results of their medical examinations? What happens with disability in this period of time? Is it better to extend an active working biography, and increase the number of disabled people who are to be kept by our society at their own expense, or should they retire at a reasonable time, giving an opportunity to implement their pension plans, which they could realize before?

Demographers have some very serious arguments. The healthcare and economists have their arguments. There are also some moral and psychological aspects. If today the average age for men is 65, so we need to have the courage to tell them that their retirement starts at the age of 65 instead of 60. It turns out that men won’t live until retirement age. The issue related to longevity cannot be regarded as a purely economic one.

Something went wrong. The longer people live in the country, the worse the country's attitude towards this social group of people is, like a social burden on the state. An extremely high concentration of scientists are among this age in the fields of science, art and health.

It is the dignity of the country, it is good that people live, work longer in the country, and we should use these benefits. Besides, GDP is formed by this generation in many ways. It is guaranteed consumption of goods and services of domestic production by people. Therefore, we should use this potential, without mechanically moving it to the area of ​​economic calculations in the parliament.

Any increase of the retirement age should be implemented step by step. It should be based on indicators of demography. We should clearly understand that the average life expectancy should give reason and ability to extend and increase the retirement age. And not vice versa. We should not encourage people to an immoral approach if we say that you cannot live if you are retired.

-There is a social term, which may grate on the ears. It is age survival...

- Economists have such terminology, but it is actually the proposed period of achieving a pension. It is a lifetime period. Someone lives on a pension for 30 years, someone lives longer, while others live less. Everything is relative. The principle of formation of the general state pension is solidarity. The accumulative pension item is targeted. A solidarity system differs in the fact that we are involved in this mechanism, no matter how many years someone lives, or how many years someone works, but how much you put into your retirement pot of bank funds. Your future pension will depend on these factors.

There is a boundary, which is overstepped by each of us, when we receive the right to enter the pension system. The first gate is opened when a man reaches 60 years, and women reaches the age of 55. The second gate opens in front of you when you claim your pension that you have worked for for 15 years. The third gate, or the window of the ticket office, opens when you show how much money you have put in during these 15 years. These are the three main conditions: age, length of service and accumulated money. These things give you the opportunity to reach the labor insurance pension. It's a simple science, but it is strict.

- How are pensioners socially protected in Russia? If we compare them with foreign retirees, for example, with European ones, where they have more social protection?

- It is difficult to compare these two pictures, but if we speak about similarity, then the German social security system is closer to us. This system of pension insurance was praised by Otto von Bismarck, who was set the task of implementing pension insurance systems, social insurance and health insurance for the working class. We have inherited the basic principles of this system: solidarity, mutual responsibility of generations to each other, because the current generation of retirees receives pensions from deductions from our wages. This is the sense of solidarity between generations. Some of our pensioners have the false notion that deductions from their wages were directed to their account and accumulated there. It is a wrong notion. These funds were directed by employers to the pension system in order to carry out pension obligations for previous generations. 22% of our wages is directed by employers to provide the current pensioners with pensions. We hope that our children, our grandchildren, will perform their obligations to the social system, and we will receive pensions, as our fathers and grandfathers did.

There are three types of pension systems in Germany. The first is the State Insurance System. Approximately 40-50 % of total payments are these payments. But they are not very large, by the way. The second type of pension, which is received by all working Germans, as a rule, is a corporate pension. It is formed with the help of contributions from employers and employees voluntarily. The so-called ‘golden handcuffs’. The company tries to retain a qualified expert as long as possible. Companies offer him such relations and direct contributions to the pension system on a 50:50 basis. And the sum is quite significant. In my opinion, Germans have 7.5% of the sum from each party. This is an important appendage to a future pension, about 40 % of the volume of pensions. The third kind of pension, which is not received by all Germans, but by quite a large number of them, is private supplementary pensions when Germans invest their earnings in private pension systems themselves and employers are not involved in this process. This is a private matter for the pensioner. Investing in a private pension system is more profitable than investing in a bank.

Unfortunately, with us, investments in banks are more beneficial in terms of payment of deposits than investing in long-term investment pension funds. Therefore, we must learn this science, it is not easy. Bismarck created it almost a hundred years ago, so this system has already established itself in Germany. It is quite stable. We have been trying to implement this technology of the future of the pension system since 2002.

But as for other types of health insurance, social insurance, in many respects they are very similar to the next population. As for the level of pensions and other social payments, it is considered in Germany that all pensions are income. This means that pensioners pay taxes from the pensions they receive, higher or lower in relation to the wages they receive. They have higher pensions due to the fact that they are getting some corporate pensions that not everyone receives. Only 6 million pensioners in Russia receive additional corporate pensions. These are workers of the power system, railways, aviation, coal miners, steelworkers, and those who work in the mining industry. Today they can afford to create additional systems.

In this regard, I must say that the problem of our small pension (the average retirement pension is about 12 thousand rubles a month) is a problem of low wages. The pension system has no issues except for low wages, which means low payments to savings for future pensions. First of all, the issue is to increase wages in the country, and then the well-being of the pension system will be much higher.

With regard to other forms of social protection, we have some forms that the Germans don’t have. Maternity capital, benefits for WWII veterans, benefits to pensioners and veterans of work on utility bills. We generally took into the account laws of Soviet and Russian legislation to stipulate the norms which can be compensated by cash benefits. Not all people can use such benefits. A resident in a rural area generally doesn't use telephony benefits, as well as medicine, transport. Very few people use sanatorium treatment. Therefore, we decided to pay money instead of cash payments. There is a system of benefits, support of rural doctors, rural teachers, rural pensioners. Volumes of these benefits depend on the possibility of the budget. In addition to 41 million pensioners (I don’t consider these to be benefits, it's a well-deserved pension) these opportunities are used by 36 million people.