Two years ago, in August 2014, Sergei Belyakov has been dismissed from his post as Deputy Minister of economic development for the post on the social network. Belyakov asked citizens for forgiveness for the stupid things we do” behind the government’s decision to extend freezing of pension savings. Today, when the country is on the verge of complete failure of the storage system, the former official, now head of the Association of pension funds shares his thoughts about what happens “nonsense” and possible alternatives.
photo: Andrew Kamakin
— Sergey, a well-known statement of the Prime Minister “no money, but you hold on,” may not be quite elegant in form, but seem genuinely: money in the country and indeed the trouble. Actually, this is explained in the government a permanent freeze of the cumulative part of the pension system: funds are used to pay current pensions.
In General, not to fat, on odezhke stretch legs. What you do not like this argument?
— I recall when the moratorium on formation of pension savings was introduced for the first time, the argument was quite different: private pension funds must go through the procedure for corporatisation and meet the requirements of the regulator. And, by the way, most of the funds these procedures successfully completed: the system of guaranteeing rights of insured persons included 46 NPF, which accounted for over 99 percent of savings accumulated in private pension funds.
The debate about the fate of the funded component has started, in my opinion, in 2012. And then everyone who participated in it on the part of authorities — both the President and the Prime Minister and Deputy Prime Minister in charge of economy and financial market, and the Ministers of economy and Finance, and the leadership of the Central Bank spoke about the need to preserve the funded part.
Its position, they explained primarily by the fact that the two-component pension system more sustainable, more adaptive to economic shocks than a model built on only one distribution. Solidarity system is completely dependent on the number of employees and size of income.
If the economic situation deteriorates, the resource is coming into the pension system will shrink. But the number of employees is reduced in any case, in view of the severe demographic situation and changes in the structure of the economy. While the number of pensioners, by contrast, grows from the beginning of the 1990s it increased by more than 70 percent. At this rate we will not be able to provide a decent level of pensions only due to the distribution model. It can be even lower than the current retirees.
As you can see, all these arguments have not disappeared from the agenda. The economy remains vulnerable to external and internal crises, the demographic situation is also, to put it mildly, not improved. It turns out that the only reason people are talking about the abolition of the funded component, is a difficult situation with payment of pensions to current retirees.
But a good reason.
– Cause serious. But let’s see whether that fixes the problem in the way it is trying to solve.
We talk about the Pension Fund deficit. Yes, it would be even greater if funds have been unfrozen, and the state has ceased to take money from future retirees. But the deficit still persists, is still to cover its required transfers from the budget. And they are growing every year.
We are trying to patch a large hole in a small patch. But much worse is that trying to solve the problem today, we create much more severe problems for tomorrow.
The state will be forced to provide an increasing volume of social obligations, which, as shows the refusal to index pensions to inflation in 2016, it is unable fully to cope today. This gives rise to risks of social instability. Shadow economy grows.
The authorities are constantly talking about your anxiety about this, but in the “grey zone” economy, among other things, pushing the decisions taken in the pension field.
Workers, which the government confiscated pension funds, sharply reduced the motivation to demand “white” the salary. I believe that the only correct decision in these circumstances — the preservation of the funded component and the lifting of the moratorium on the formation of savings.
— That is, contrary to the Prime Minister, do you think that money is?
— Because there is no money, we can agree only if to exclude the possibility of changes in the priorities of fiscal policy. However, if you phrase the question slightly differently — is it possible to find means for performance of certain social obligations? — the answer will definitely be positive.
Give a simple example. Here people walk the city and see a large-scale repair and construction works. I leave out the effectiveness of spending, but it is obvious that the costs in any case enormous. I’d rather more money went on social services — primarily education and health, the state of which can hardly be called prosperous.
Many parents, for example, faced with the fact that schools are constantly turning to him with requests to Finance certain expenditures. It is clear that this is not happening due to lack of funds, and because it is placed budget priorities.
— Across the country the situation is similar?
– I think so. I believe that money is enough to save funded pension system in its current format — six percent rate (insurance premiums are paid by employers to the pension Fund, account for 22% of the annual payroll of the employee, of which 6% for citizens 1967 year of birth and younger — going on the formation of their funded pension. — “MK”).
However, if the government believes that six percent — it is a luxury in a crisis, you can go for a temporary reduction of contributions to the funded system.
This is the way chosen, for example, the Baltic States and Slovakia, the same compromise we proposed. A proposal sent to us in the government, ministries and departments, Central Bank and Pension Fund. So, how much more can be reduced — the question of discussion and calculations. It may be two or three percent.
The cost of one percentage points — 58 billion rubles. And as the recovery rate will return to levels established by law.
The government, in fact, already responded to your offer. “This is impossible, because in order to pay the pension, it is necessary to take money from seniors and transfer them to pension funds and, accordingly, to invest in the form of transfer; this transfer is not provided,” — said Olga Golodets.
— First, Olga Golodets is not the government…
— But the Deputy Prime Minister.
One of the deputies. Secondly, the position of the “impossible” is not an argument. This is an attempt to evade a substantive discussion. Could they take the money of future pensioners, that too seemed impossible.
I repeat: it’s all in how the government prioritizes. If the priority is the fulfillment of social obligations, then the problem is solved by changing the budget structure. It is clear that some costs will be reduced.
In addition, we have a national welfare Fund, which the act says that it is designed primarily to support the sustainability of the pension system. You just have to comply with the law. To date, the Fund volume is more than 4.5 trillion rubles, which is three times more than the amount withdrawn from the savings accounts of citizens for the three years of the moratorium. Another source of funds to fill the deficit of the Pension Fund could be the proceeds of privatization.
— What expenses would you cut?
— First and foremost — the cost of various megaprojects. Associated, for example, with the construction in the field of transport or energy infrastructure. Most public funding here could substitute private capital. The construction of many public institutions, including medical and educational, can also be implemented on concession principles.
— And what’s the interest business?
— That you receive income from the management of the created object: part of the services will be provided on a reimbursable basis. What in fact is happening today. The second direction: the reduction of the military-industrial complex and the redistribution of these funds in favor of social articles.
And this at a time when Russia is surrounded by enemies?..
Well, maybe we must have something to do with this ring, out of and begin to acquire allies. In any case, in the XXI century the power of the state is not measured alone by the power of the military-industrial complex.
— Seditious thing to say.
– You can somehow relate to what I’m saying. But do not forget about the geopolitical catastrophe of 25 years ago, associated with the collapse of a superpower.
This superpower has spent a lot of money on the military-industrial complex. And with the MIC she was all right. But it turned out that this was not enough to save the state.
No, I’m not against our military, I don’t want to say that the defense industry does not have to spend money. But, first, the current budget spending on these purposes, in my view, manifestly excessive. By the way, they can also be reduced by attracting private investments: public-private partnership in the defense industry is possible.
Secondly, if we do not invest in people, and in the military-industrial complex run the risk of hopelessly behind. The defense industry, like other industries, depends not only from iron but also from the brain. We here are all worried about the outflow of capital. But a bigger problem is the outflow of human capital. In fact, the former is a consequence of the second: if people are not comfortable to live and work, then the money goes. Not Vice versa.
And in order to preserve human capital, it is necessary to increase social spending on health, education and, of course, on the pension system, which is one of the key factors of quality of life.
— However, as assure your opponents, citizens not only do not lose from the rejection of “natapilok”, but, on the contrary, win. Will allow myself to quote Olga Golodets: in case of failure of the storage component of our retirement will be more stable, and it will not depend on market conditions, economic situation, from investments in projects that are either held, or not held”.
– Let’s start from the end: “not will depend on the projects that are either held, or not held”… private pension funds live at the expense of investment returns. Therefore, they are motivated to invest in reliable projects and to very carefully select them. Can these funds be unsuccessful in their investment? Can. But no matter how unsuccessful was no investment to refund the face value is guaranteed by law. You can not make money, but you will not lose anything.
— Average result last year, however, much more modest 10.8 percent, while prices rose by 12.9.
– Well, I say: it is incorrect to draw conclusions by results of one year. We are talking about a long term investment. Nevertheless, even in a difficult 2015 the results of the NPF was at the level of indexation of current pensions, and this year the comparison is clearly in favor of the non-state pension funds.
Current pensions were indexed by only 4 percent, while the yield of NPF in the first quarter exceeded 8. By the way, the state’s failure to index pensions to inflation suggests that the distribution model is no less dependent on the “market”.
We promise that it is withdrawn from our Bank accounts the funds will be compensated with points. But today, the cost of score one, tomorrow — another. Nothing but the state of the economy and budget possibilities, it is not defined, and I don’t think in the foreseeable future the economic situation in the country will radically improve. The number of working people, will remind, will be reduced, and recipients of pensions — to grow. As from all this we can conclude that distribution of the pension will be more, I don’t quite understand. It is just a hoax.
— How do you feel about the concept of individual pension capital, developed by the Central Bank and Ministry of Finance? As far as is known, it is proposed to retain the 22 percent of the current insurance contributions to the distribution system and at the same time stimulate additional savings, which will go exclusively to the NPF.
– I treat this as a sincere attempt to save the funded system. Nevertheless, I believe that this is a failed attempt.
The situation in the economy is that the vast majority of the population has neither the means nor the motives to do voluntary deductions. We have 41 percent of citizens admit that they do not have enough money for food and clothes. What do you think, will they to save for their future retirement? The answer is obvious.
It is impossible not to take into account the low level of public confidence in the pension system as a result of permanent changes of game rules in the pension insurance. It is unlikely that most citizens will choose voluntary funded system.
At least, it will be the choice of the citizens themselves.
– So in fact they have already made their selection: participants of the funded system are today about 50 million people, nearly 31 million of them moved their accounts to NPF. According to the poll, 72 percent of Russians are in favour of maintaining the cumulative system in the required format. Today, nothing prevents citizens to voluntarily pay contributions to the NPF.
This is a struggle for those six percent that make up the funded part of premiums for compulsory pension insurance. We insist that the property of citizens, developers of the concept propose to consider them part of the distribution system, and funded to support the expense of additional contributions.
I was really impressed by the way how is the discussion of these proposals. It is completely open, we have a great dialogue. But, as I said, the idea, in my opinion, doomed to failure. Will be damped dynamics.
First, as provides concept, this scheme will involve all working citizens. But when the “undecideds” will see that this is an additional burden, reducing their wages, the number of participants starts to decline sharply. In my estimation, to use the proposed model will be able not more than 10 percent of current participants of the funded system.
— According to the head of the Ministry of Finance, the new pension system can make for the second half of next year. That is the issue, it turns out, is almost solved?
— As far as I know, nothing is not yet resolved: in the autumn this question will be discussed in the government.
– On proposals of the Ministry of labour I do not know. As for the Ministry of economic development, as far as I know, their position is consistent with our views: the preservation of the existing models and defrost the funded part.
In addition, the concept of pension system development is part of the Center for strategic research under the direction of Alexei Kudrin. Frankly, I lay this work hopes. Mr Kudrin thinks strategic categories, knows how to set a task and how to organize the workflow.
— I heard that you also have some relevance to Kudrino “retirement” team.
— Yes, I am a participant in this process. But we have an agreement: to prepare proposals we do in the public sphere is not impossible.
– I can not ask and that is of concern to the Russians, at least, no less than the fate of the funded system. How soon could we expect an increase in the retirement age?
– Talking about it in the corridors of power already for a long time, but no decision has yet been taken. Waiting for the presidential election?
I think, Yes. Apparently, the appropriate decisions will be taken after the elections. My personal opinion: if it were possible to avoid it, of course, raise not worth it. Duration and quality of life, we are far behind countries where a higher retirement age. But there are objective factors that do not leave the power of choice. Unfortunately, we missed the time when you had to make decisions that would reduce the dependence of the pension system from the topic of retirement age.
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