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Wednesday, March 14, 2018

Pensions in Russia will outstrip inflation for the centennial of the October revolution

As stated by Dmitry Medvedev at a meeting on social support of citizens, pensions in Russia can be indexed to inflation. However, only in 2017. As for 2016, then the situation is not clear. In February, the government increased pensions by only 4%. Will they be indexed again this year — it will become clear in the autumn, when our officials will once again assess the economic situation of the country.

photo: Gennady Cherkasov

The issue of increasing payments to pensioners was made in the first lines of the national news agencies after a rather controversial answer of Dmitry Medvedev on a specific complaint pensioners from Crimea. While in Feodosia, the Prime Minister, coming to meet with local residents heard out of the crowd these words: “For a pension of 8 thousand it is impossible to live. The prices are crazy. Wrong indexing we count. The wipe feet on us!”.

Medvedev’s answer was as follows. Money for increase of pensions are not all over Russia. “We find that money — will do the indexing. Hold on, all you good, good mood and health”, — said the head of government.

This statement has caused a tremendous outcry. Some have acted with sharp condemnation of the words of Medvedev, while others supported his position.

On the one hand, in last month’s budget deficit reached 8.6% of GDP. Money in the Treasury is sorely lacking. According to economists, in the beginning of 2016, the Reserve Fund exceeded 3.6 trillion rubles, and by June 1, this volume fell to 2.6 trillion. Many experts do not exclude that they will end in 2017.

Along with this, pensions are sacred. Earlier, labor Minister Maxim Topilin said that supports positive predictions, according to which a re-indexing in the second half of 2016 will turn out in full. Now this is confirmed by the head of government.

But he says both. “Our goal was not to spur inflation, thus not to devalue pensions and other social benefits including. Because the worst thing when indexing occurs, and then inflation is rising and there are known costs”, — said Medvedev.

According to the Chairman of the Federation Council Committee on social policy Valery Ryazan, intentions to index pensions or other social payments for the second time this year is a really positive step. In the beginning of the year in the Federal budget for these purposes was not enough to 800 billion rubles. Only the deficit of our budget this year is in danger of not 3 trillion. So 800 billion – quite a substantial amount.

Along with this, according to experts, from November 2014 began and to this day continues the decline in real incomes.

Because of this, the purchasing power parity of Russia per semester drops 20%. Less available fish, rice, sugar and, strangely enough, cabbage, carrots and onions. If last year the Russians on the average salary could buy more than a ton of cabbage, but now he can purchase a total of 600 pounds.

The availability of meat decreased by 8-16%. Potatoes, flour, butter and sunflower oil in the same framework.

The average salary of Russians in the beginning of this year is just over 33 thousand rubles.

The retirement of our citizens, on average, from 7.5 to 15 thousand it is Obvious that they buy cabbage and potatoes, not to speak about housing and communal services, will be quite difficult.

Of course, if the state a second time will index pensions — will be a help. But if it will help — not a fact.

For the first time this year pensions were indexed by 4%. By December, according to forecasts of Ministry of economic development, inflation will reach 6.5%. So, pensions like the state will have to raise just 2.5%. And about 2016 has not yet been mentioned. Dmitry Medvedev and other representatives of the government said that the pension indexation at the inflation level will begin in 2017 year.

Note that, in the opinion of the Professor of the Higher school of Economics Igor Nikolayev, in the autumn of this year, when rise significantly consumer spending, inflation will skyrocket. At the end of twelve months it can be 10%.

In this regard, the second increase of pensions even with this year can turn from a manna from heaven in the usual handout that will not be a patch in pockets and purses.

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