Putin plays the good cop and scales back pension reform (for women)

Putin plays the good cop and scales back pension reform (for women)
Putin plays the good cop and scales back pension reform (for women)
By bne IntelliNews August 29, 2018

After two months of silence Russia's President Vladimir Putin came out with a televised address to the nation on August 29, in which he scaled back the controversial, long overdue, and widely unpopular pension reform that hikes the retirement ages for Russians from Soviet era lows.

In an address that was drum-rolled in a PR build up by the Kremlin, Putin cut back the retirement age increase for women by eight years from the current 55 to 63, scaling it back to 60 years. He also introduced a number of other compensatory measures that were immediately picked up by the cabinet and the parliament.

Putin has staunchly opposed a retirement age hike throughout his 18-year rule and since the pension reform was launched in 2018 Putin commented on it only once, but then he did not categorically denounce it. The original bill currently in the State Duma proposes hiking the retirement age for women to 63 and for men to 65 by 2034, from 55 and 60, respectively. The Ministry of Finance has said previously that he change is necessary as with Russia’s deteriorating demographics it is afraid of pension payments overwhelming the state finances in the coming years.

In the address Putin said that the reform "could no longer be postponed", and urged the people to "treat with understanding" the "difficult, but necessary decision." The President warned that "relatively soon" the number of workers will equal the number of retirees, which would burst either the pension system of the budget and fiscal buffers supporting it. Previously one pensioner was supported by the social contributions of two workers.

Polls showed that discontent over the pension reform has snowballed, as the readiness of Russians for mass protests over economic policies has risen from a record low to top 40% for the first time since 2009. The popularity of Putin, and to a larger extent, the ruling United Russia party, has also taken a hit.

Previous reports already indicated that Kremlin is looking for ways to scale back the reform, while also making Putin the messenger of good news. "It is obvious that a giveaway from the president is due," one commentator said. 

The timing of the reform is also awkward as the pro-Putin United Russia party will face difficulties in the upcoming regional elections in September due to the reform.

The giveaways announced by the president concern mostly working women, with the retirement age for women to be hiked to 60 years instead of 63, while mothers with more than three children will have the right to retire one year earlier for every additional child. Other reports say that the military has also been exempted and some classes of soldiers have a retirement entitlement from 35 years old.

"Our country has a special, careful attitude towards women," the President said, adding that "we understand that they not only have work at their main place of employment, but also usually have the carry the household, care for the family, raise children, and worry about grandchildren. The retirement age for women should not increase more than for men," he noted.

For people about to retire in the next two years, a six-month cutback from the increased retirement age will be available. The unemployment benefits for people within 5 years away from retirement will be more than doubled. The employers will face administrative and even criminal charges in case of firing, or refusing to hire, workers in pre-retirement age, Putin promised.

The sources of Vedomosti daily previously claimed that Putin's address will seal the discussions of the pension reform and will kick off the preparations of the 2019-2021 federal budget.