Moscow raises retirement age and VAT
On the very day that the Fifa World Cup kicked off the Russian government announced plans to raise the retirement age step by step from 60 to 65 for men and from 55 to 63 for women. Value added tax is also to go up from 18 to 20 percent. Some observers believe these reforms were long overdue. Others say Russia won't achieve anything with this move.
Overdue since Soviet times
The raising of the retirement age was long overdue, Izvestia comments:
“The problems with the pension system go back as far as the Soviet era, and the early 1980s. ... But back then - above all for political reasons - the decision was taken not to do anything: thanks to the high price of oil pensions could be financed out of the state budget, and that was that. Nevertheless, the phenomenon of the ageing society had already begun. The problems started to accumulate and it's only now, in the new Russia, that the government has had the courage to take serious steps. ... The main goal is to stabilise the pension system. ... Raising the retirement age will make it possible for pensions to be financed to a larger extent by today's working population.”
Why the reform won't work
Vedomosti points to several problems with the envisaged pension reform:
“First of all there's the risk that new pensioners won't reach the working lifetime required by law to maintain their pension. People who worked in the days of widespread moonlighting and salaries paid in thick envelopes are now reaching retirement age. Their only hope lies in a social pension, but that's lower and starts later. ... Secondly, the higher retirement age means employees must work longer. But Russians have a hard time finding jobs long before they reach retirement age - namely from the age of 45 and upwards. ... Thirdly, there's the danger that people who have problems making ends meet will try to claim disability benefits. The number of applications for invalidity pensions normally goes up with every change to the pension system.”
Nice games but less bread
The timing of the announcement is no coincidence, Novaya Gazeta believes:
“The start of the Fifa World Cup has a real significance for domestic policy. It looks as if unpopular reforms and what amounts to new taxes to the benefit of the state have been introduced just as the Russian public is busy discussing the talents of its national football team. Just as the big football fest is getting underway, the government has announced its plans to raise the retirement age and value added tax. The calculation is correct: it's easier to take the people's bread away when they've got games to keep them happy.”
Putin tricked his electorate
Putin simply waited until the presidential elections were over to make his move, social psychologist Alexey Roshchin comments in newsru.com:
“If Putin had said truthfully before the elections 'Unfortunately, dear fellow citizens, the first thing I'll do after I'm sworn in will be to raise the retirement age in Russia', would he have won so many votes, and with such a high turnout? ... In a move that was as cynical as it was clever, he tricked the gullible electorate. Because raising the retirement age is extremely unpopular: in a poll carried out by the Romir research institute, 92 percent of all respondents opposed the move. A phenomenal figure, even higher than Putin's approval rating (83 percent).”