Russia's pension system will not be able to function without reform - Finance Minister

The Russian pension system will not be able to work properly by 2030 without raising the retirement age, First Deputy Prime Minister and Finance Minister Anton Siluanov said on Sunday in an interview with Channel One.

"Many people say - let’s hold back these changes until 2030. What will happen? In 2030, one working-age adult will account for one pensioner, which is impossible," Siluanov said.

According to him, today in Russia supporting of one pensioner falls to 1.8 working-age adults. Siluanov explained that on average people are working for about 30 years, and during this time their employers transfer 22% of salary budget to the Pension Fund. At the same time, pensioners live an average 22 years in the period of active longevity after retirement.

Timing of the reform

The beginning of public discussions of changes in the Russian pension system was not connected with the beginning of the World Cup and was supposed to take place even before the tournament started, First Deputy Prime Minister said. 

"I assure you, as a direct participant in all developments in terms of the pension system changes, that we originally planned to come up with our proposals for a whole package of changes, including taxes, budget, pension system, earlier (before the start of the 2018 World Cup - TASS). That is, this is a pure coincidence," Siluanov said.

The Minister explained that the retirement age issue was discussed in the government 10 years ago by former Finance Minister Alexey Kudrin. "This issue is very important and socially significant, so of course, the issue of changing the retirement age has been is discussion for a long time," Siluanov said.

Individual pension capital

Siluanov added that the Russian Government intends to submit a draft law on individual pension capital to the State Duma before the end of 2018.

"This year we will go to government with a bill, according to which citizens could pay and form his so-called individual pension capital, we will have appropriate insurance for these sums," Siluanov said.

"It is important that the state guarantees the operation of this system. Not the way of was before with non-state pension funds - money is invested, fund closes, money is gone. This would no longer be possible, because insurance mechanisms have been created to save this money," Siluanov explained - TASS.