“Destruction of the Institute of Civil Society:” Expert Predicts Failure of New Pension Plan

“Destruction of the Institute of Civil Society:” Expert Predicts Failure of New Pension Plan
In mean time, economists are claiming in one voice that although the guaranteed pension plan (GPP) has really been drafted properly, people simply have no money for joining the new system.

The GPP that was presented recently by the Ministry of Finance and the Central Bank of the Russian Federation has caused a lot of discussions among the people. Particularly, some experts have finally admitted that the project did really have everything necessary to ensure their living when they grow old.

It might seem that tax benefits, pension inheritance, and an opportunity to receive early pension payments in humble circumstances would motivate the rank-and-file Russians towards taking part in the new system.

At the same time, economists are claiming in one voice that although the GPP was really drafted properly, people simply have no money for participating in it. Experts estimate that only those who have wages several times higher than the national average will be able to save for retirement.

In addition, there is a high level of mistrust towards the innovations in the pension legislation among the people. They have fresh memories of last year's pension reform, in the course of which the retirement age was raised. However, there are still no noticeable positive shifts in this regard.

For example, the economist Alexander Gudkov disagrees with his colleagues and believes that the Russians will not use GPP, which is unrefined so far.

“There are many half-baked notions in the new funded pension plan,” he said. “Participation in it is voluntary, but the most important thing is that it is not quite clear how and under what conditions people’s “frozen” assets will be transferred to the GPP. If they don't understand what was going on with the previous plan, what can we possibly say about the new one? Both systems are very similar, and people won't use them. The GPP is an attempt to get away from the pay-as-you-go system in social security. We see the destruction of an institute of civil society and an institute of social welfare state. The system is doomed to fail,” the expert said.

Wek reported earlier that the Finance Ministry had passed a decision on the new pension plan of the Russian Federation.