EDITORIAL: Putin Scams the Elderly

EDITORIAL

Putin Scams the Elderly

An recent article in the Sydney Morning Herald headlined “Russia a better place to grown old” complains that elderly Australians are being victimized by their government, being treated more roughly in terms of pensions than their counterparts in Russia. In fact, nothing could be farther from the truth, and the article turns out to be one of the shoddiest excuses for journalism I’ve seen from mainstream media in quite some time.

The author, one Tom Reilly, claims the value of an average Russian pension is $75 per month. To start with, that’s simply false.  In 2008, an average pension was almost twice that, $140 per month.  And even though the article understated the value of Russian pension by half, its conclusion that Russians were somehow better off is still hopelessly bogus. 

In his lifetime, an average Australian will collect pension benefits worth more than six times than what the Russian government will pay to an average Russian, even taking so-called “purchasing power parity” currency adjustments into account. In straight nominal terms, Aussies are paid ten times more than Russians in their lifetimes where pensions are concerned.

Let’s look at the details.

An average Australian lives to the age of roughly 82 years and can retire and receive a pension at the age of 67, according to Reilly (hopefully he can at least get the Australian data right).  This means the average Australian will collect a pension for about 15 years.

An average Australian pension is worth about $1,100 per month (amazingly, Reilly doesn’t even deign to mention this fact, which would of course conflict rather stunningly with the amount of the Russian pension and thereby undermine his little narrative. That means that an average Australian will collect nearly $190,000 in his lifetime from his government for old-age compensation.

An average Russian lives to the age of 66 —  a shocking16 years less than an average Australian.  Australia ranks #11 in the world for adult lifespan, while Vladimir Putin’s Russia ranks a shocking #157, well below countries that don’t claim G-8 membership like Bolivia, Guatamala and Iraq.

Reilly claims Russian can retire at 55, another outrageous misstatement of fact. Only women can retire at 55 in Russia, men must wait until age 60 (beyond the male average lifespan of 59).  According to Martin McKee, an expert in Russian public health at the London School of Hygiene and Tropical Medicine:  “A typical 18-year old in the West has a 90 percent probability of reaching retirement age, but for young men in Russia the odds are reduced to 50 percent.”

But let’s humor Reilly and work with 55 as if it applied to everyone.  It would mean the average Russian would collect a pension for only 11 years – nearly one third less time than an Australian. A Russian is paid about $140 per month as a pension, and that means an average Russian would collect about $18,500 in his lifetime from his government – just 5% of the amount an Australian will collect.

According to the World Bank, in 2007, Australia had a per capita nominal GDP figure of about $39,100 while Russia had a figure of $9,100.  In other words, the ratio between the two was 4.3:1.  Adjusting for so-called “purchasing power parity,” which argues that since Russian wages and prices are lower a Russian doesn’t need to earn as much as an Australian in order to have the same standard of living, Australia’s figure falls to $34,900 while Russia’s goes up to $14,700 or a ratio of 2.4:1.  This means that, arguably, one must multiply the value of Russian money by a factor of 1.625 in order to compare it to the value of Australian money.

So we’ll do that, and multiply Russia’s $18,480 lifetime pension award by 1.625. That means a Russian is receiving, at most, $30,030 in Australian money – a truly astounding 6.4 times less than an Australian! It takes more than six Russian pensioners to match the income of just one Australian.

Though this is apparently big news to Reilly, it’s of course common knowledge in Russia, which freely admits its pensioners are starving.  In 2007, the nation fixed the minimum income necessary for subsistence at 3,700 rubles per month but it paid only 3,000 rubles per month in average accrued pensions.  The average monthly wage for a worker was 12,700 rubles meaning that Russia paid a miniscule 25% income replacement in pensions.  Australia’s figure is well over 50%.  That figure alone shows the extent to which the Putin regime is scamming Russia’s old folks to pay for its new cold war with America.  And it’s truly apalling.

And let’s be clear:  12,700 rubles is $384. That means an average Russian worker is getting paid $2.40 per hour for four weeks of full-time work, while facing double-digit consumer price inflation.  So Russia’s definition of “subsistence” is rather stringent if it believes someone can subsist on one-forth of the average wage, now isn’t it?

Now consider this:  Nearly 40 million currently Russians, one-third of the total population, receive pensions (state-controlled wire service RIA Novosti admits Russia is a “nation of pensioners”). At $140 per month, that means pensions cost the Kremlin $67.2 billion per year.  If Russians lived as long as Australians, they’d be living 25% longer than they do now and that would mean 25% more pension expenditures. 

In other words, if Vladimir Putin implemented a policy that successfully caused Russians to live as long as Australians, it would cost Russia over $15 billion each and every year just to pay the pensions. Add on all the additional medical and related expenses, and you can easily see why Putin is in no particular hurry to close the gap. It’s much more efficient to let Russia’s archipelago of ghost villages multiply.