EDITOR’S NOTE: This is the fifth and final installment of our series from Dave Essel translating the latest issue of the Nemtsov White Paper condemning the Putin years. The first installment is here, the second is here, the third is here, the fourth is here and the prior issues are here. The full document is now online as a PDF here. In our next issue we will make the full document available as HTML that can be cut and pasted. Video of Nemtsov and Milov at the press release is here.
PUTIN: What 10 Years of Putin Have Brought
An independent expert report by
Vladimir Milov and Boris Nemtsov
Translated from the Russian by Dave Essel
CHAPTER SEVEN: Pensions Breakdown
One of Putin’s greatest failures was the mess he made of pensions reform. When he came to power, Putin promised that he would give the country a modern pensions system that would provide the elderly with a decent income and at the same time not make for too great a burden on the budget.
This was achievable – if the country had gone over to a funded pensions system under which pensions are paid not from the contributions of the currently employed and the general budget but from accumulated contributions and the income derived from investing them.
The pensions reform has been a catastrophe. Despite the oil price windfall, pensions have stayed under the official subsistence level throughout Putin’s rule.
The distribution pensions system is cracking at the seams. Back when we published our first report on Putin, we predicted that Russia’s pension fund deficit would hit 1 trillion roubles by 2015.
But our gloomy prognosis was not gloomy enough: the deficit reached 1 trillion 166 billion roubles – 3% of GDP – in 2010! Funding pensions is one of the main drains on Russia’s federal budget today.
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