Russian President Modifies Pension Reform Plan

President Putin announced the changes in a rare televised address

President Putin announced the changes in a rare televised address

"The retirement age for women should not increase more than for men".

Putin, who has dominated political life in Russian Federation for 18 years, has enjoyed sky-high approval ratings, and his confrontations with the West often shore up his domestic political support. Putin countered with a proposal that will allow women to take early retirement after 37 years in work, compared with 40 years today.

Putin said that unlike a decade ago, the country's economy was ready for such reforms, pointing to the lowest unemployment rate since 1991 and increasing life expectancy.

The sources of Vedomosti daily previously claimed that Putin's address will seal the discussions of the pension reform and will kick off the preparations of the 2019-2021 federal budget.

The softening of the proposal for women, to five years instead of eight, was because of what Putin called the important role women play in Russian society.

The opposition has, of course, demanded more. Because paying pensions in Russian Federation requires 20 billion rubles daily.

However, he stuck to the overall government plan, warning of the collapse of the financial system and hyperinflation if the pension system was not reformed and evoking the country's enormous losses during World War II.

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After describing what he said would be the unsustainable costs of keeping the retirement age unchanged, he went on: "A lack of action now or taking various cosmetic measures would be irresponsible and dishonest with respect both to our country and our children". It would be formed from the Russian government's stakes in state-controlled companies and use its investment income rather than capital to fund the pension system. Nor does he have any interest in an overhaul of the way his government runs the Russian economy at a time when the future of energy markets is uncertain and the threatening Russia with economic sanctions that may actually bite.

Putin said the reform would allow authorities to better adjust pensions for inflation, raising them from some 14,000 rubles ($200 dollars, 175 euros) now to around 20,000 rubles ($353) a month in 2024.

Putin's spokesman has said the Russian leader is unfazed by fluctuations in his popularity but had made a decision to act on the pensions question because of its importance.

The concessions the president has offered show Russians that he shares their concerns without undermining the economic objective of the reform.

President Putin has just signed a new bill on pension spending, envisaging a deficit of more than 265bn roubles (£3.1bn; $4.2bn) in 2018.

"Putin is panicking and is trying to sweeten the pill", Navalny wrote, calling on everyone to protest on September 9 despite his arrest. This tactic can only stop working once a majority of Russians see change as a necessity, and not just an option pursued by a handful of idealists or self-serving politicians.

Leonid Bershidsky is a Bloomberg Opinion columnist covering European politics and business. The views expressed therein are not necessarily those of, its sponsors or advertisers.

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