Russia to Decide on Pension Overhaul This Year, Medvedev Says

Russia’s government will this year decide on how to overhaul pensions and stem the swelling deficit of retirement benefits, said Dmitry Medvedev, the outgoing president and future prime minister.

“In the coming months, we need to decide on some very important issues, including how to develop the pension system and what role will be played by state pensions,” Medvedev, who is set to swap jobs with Prime Minister Vladimir Putin next month, told senior government officials in Moscow today.

Putin, who won a third six-year term as president in March, promised in his election campaign to refrain from raising the retirement age and to increase pension benefits. The World Bank and the European Bank for Reconstruction and Development have recommended that Russia raise the retirement age to stem a widening deficit on pensions.

The shortfall will rise to 1.75 trillion rubles ($59 billion) this year from 875 billion rubles in 2011, Deputy Health and Social Development Minister Yury Voronin said in October. That’s 3 percent of the Finance Ministry’s 2012 gross domestic product forecast.

The Finance Ministry is proposing to gradually raise the retirement age to 63 years from 2015 to eliminate the deficit by 2029, Kommersant reported on April 20, citing a letter from Deputy Finance Minister Alexander Novak to Health Minister Tatyana Golikova. That clashes with a plan to raise the pension age for men and women to 65 years between 2030 and 2047 made by the Health Ministry and the Pension Fund, Kommersant said.

The Health Ministry’s proposal includes increasing the pension age for women to 60 years between 2015 and 2029 from 55 currently, the Moscow-based newspaper said. The retirement age for men is currently 60 years. The plan, which also foresees raising pension contributions, will be completed by October and should be approved by the government by the end of the year, Kommersant said April 16.

To contact the reporters on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net; Stepan Kravchenko in Moscow at skravchenko@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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