Russians Should Save for Retirement Themselves, Says Central Bank Deputy Chair

Russians Should Save for Retirement Themselves, Says Central Bank Deputy Chair


First Deputy Chairman of the Central Bank of Russia Sergey Shvetsov has recently given a statement specifically on the subject of pensions, pensioners and pension savings at an enlarged meeting of the Federation Council Committee on Economic Policy.

“I think that it is a bit late to help pensioners,” Shvetsov said. “It is necessary to help citizens to retire with a good pension project which, first of all, should be formed by the citizens themselves during their whole life. This is called capitalism. When a person retires relying only on the state, this is socialism. We are closer to our Soviet past in this respect, and the proposal of the Central Bank and the Ministry of Finance is just to start this transformation.”

Shvetsov believes that passive income from stocks, bonds, and other financial instruments can support pensions.

“We have now more than 10 million accounts opened,” he said. “People believed and began to buy shares because, firstly, companies started paying dividends and, secondly, banks started offering these products to the public.”

“This is a direct and honest statement expressing the government position,” Doctor of economic sciences Mikhail Delyagin, academic director of the Institute of Globalization Problems and incumbent member of the Russian Academy of Natural Sciences, told “Everyone understands that it is simply unreal to live on a pension, even in theory. Two-thirds of pensioners now have pensions that are below the subsistence line, but in reality, it is at least twice as low. The state collects quite a lot of money from us under the pretext of future pensions, and then solemnly declares that it does not owe us anything. So, Mr. Shvetsov voiced this position of the state directly, honestly and sincerely though he passed it off as his personal opinion, for some reason.”

Delivering a speech to senators, Shvetsov specified that there are “many options” for citizens to make independent savings today. For example, pension funds, insurance companies, and “the purchase of the real estate, in the long run” that will bring money to a person when renting it out.

According to Shvetsov, such passive investment income is a significant part of pension plans in developed countries, and the capital market is a source of wealth not only for the majority but also for minority shareholders.

Bank of Russia Governor Elvira Nabiullina said a little later that she regretted a disappointing statement by her First Deputy Sergey Shvetsov regarding support for the elderly. She underlined that many elderly people had no opportunity to save for their old age and called ensuring decent payments for them one of the government's priorities.

“The Central Bank is working to develop private pension funds so that Russians can form long-term savings in the future, as well as to improve the stability of the financial system so that people don't have to worry about the safety of their money,” Nabiullina said.

“Well, Elvira Nabiullina has already apologized for her subordinate,” said Delyagin, “because Russia doesn't have that kind of public policy that one can speak about out loud. As for the fact that Shvetsov believes that pensioners can use various funds, insurance companies, and even buy real estate to rent, it is a real mockery! If a person has a salary even at the level of two subsistence minimums, then, I beg your pardon, from what income can he save for his pension and even more so for the purchase of real estate?”

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