International Perspective on the Retirement Age Increase

Retirement age in Russia has to be raised. That’s the verdict of the majority of sociologists, political analysts, and of the Ministry of Economic Development, who have been supporting the retirement age increase up to 63-65 years. However, according to opinion polls, the population of Russia is against any retirement age rise. People of 25–34 age group mostly tend to oppose the retirement age rise, which is surprising. And even if some people advocate for a later retirement, they definitely link it to the rise of the pension funds.

Retirement age in Russia has to be raised. That’s the verdict of the majority of sociologists, political analysts, and of the Ministry of Economic Development, who have been supporting the retirement age increase up to 63-65 years. However, according to opinion polls, the population of Russia is against any retirement age rise. People of 25–34 age group mostly tend to oppose the retirement age rise, which is surprising. And even if some people advocate for a later retirement, they definitely link it to the rise of the pension funds.

At this point the normal retirement age in Russia is 60 years for male and 55 for female citizens. The need for immediate measures to be taken is urged by Russia’s financial authorities, as the slump in births together with the increase in life expectancy by 2030 will lead to the situation when the costs for a multimillion layer of pensioners able to remain in the workforce will be primarily covered by the gradually decreasing number of economically active population. A. Moiseev, Deputy Minister of Finance, even mentioned the possible rise in the payroll tax to 50%, if the retirement age stays the same.

The number of retired people has grown by 4.3M (to 42.7M) in the last 10 years and it will grow further, as well as the average life expectancy. Even if in 2018 the life expectancy rate of 74 years described in Putin's «May orders» is not achieved, it might apparently reach 75-76 years by 2030. It should be mentioned that in 2016 the average life expectancy rated 71.2 years (76.6 for women and 65.8 for men). Russian government has to take urgent measures in order to fend off the stable economic development challenges and not to jeopardize the future generations.

What is the international perspective on the retirement age, however? Are the Russian politicians eligible to state that the retirement age in Russia should not be raised due to the economic stagnation, foreign policy issues, and severe climate conditions? A detailed analysis of the countries that are in the situation akin to Russia on the most frequently-used criteria, shows that the conditions for the retirement age rise have long been pressing.

Comparable Economic Strength

When analyzing the retirement age rates in countries with comparable GDP per capita in current USD prices, Russia’s position is close to the one of Brazil, Mexico, Turkey, and Mauritius (USD 8,500-9,100 per capita). It should be noted, that D. Rousseff being officially removed from office, the government of Brazil intends to raise the retirement age to 65 years and cancel the previously available opportunities to retire preschedule.

Let us assume, that GDP per capita in current prices doesn’t reflect the real situation in the country economy, so it is the GDP per capita with PPP conversion factor to be considered. Within the range of USD 24,000 and 26,000 per capita there are Russia, former Soviet Republics of the Central-East Europe, and Kazakhstan (see Table 2). The average retirement age, however, is between 61-62 years among the countries mentioned.

Comparable Average Life Expectancy

Taking the above mentioned data into consideration one can oppose that the life expectancy in these countries is higher than in Russia, so the retirement age is accordingly higher. Azerbaijan, Egypt, Kyrgyzstan, and Suriname are the countries with similar average life expectancy rate. In each of these countries the retirement age for men and for women is on average higher, than in Russia (see Table 3).

The President of Russia stated that the country is not ready to raise the retirement age - should the retirement age be raised the person aged 65 will have to «grab a wooden mackintosh» (a jovial term used in Soviet-era comedy movies to mean coffin — TN) without any rest. An average Russian man would have about 5.8 years after he retires, the average life expectancy being 65.8 (as of 2015). Among the comparable by life expectancy countries only Kyrgyzstan has lower numbers. However, arguments of the kind neglect the situation for women in Russia — and it is completely different.

The comparison of average woman’s life expectancy and the retirement age is worthy of note. After retirement an average Icelandic woman lives 15.7 years, a Finnish woman lives 16.1 years, a Canadian - 17.2 years. In Russia this index is 21.1 due to the current pension legislation. In this way, Russian women spend more than a quarter of their life in the retirement status, while the women of the leading Northern countries -19-20%. What makes the situation even more disproportionate is that most women live to be retired, unlike men with high mortality rates in the economically active age groups.

Comparable Climate Conditions

compare Russia and foreign countries. It is often mentioned that the climatic peculiarities make the labour in Russia more difficult and energy intense, compared to the foreign countries. Though the global tendency elicits an inverse trend that the retirement age in the Northern countries is a lot higher than in subtropical and tropical climate zones. The average year temperature in Reykjavik, Saint-Petersburg, Montreal, and Helsinki is 5C. In Moscow this number is a little higher, similar to Toronto, and makes 5.8C. Greenland temperatures being within 2-4C.

Based on the fact that it is cold (and not heat) that is a more significant factor for people’s work capacity, the retirement age in Russia is incomparably low than in other Arctic countries (see Table 4). Iceland and Norway easily raised retirement age to 67 years both for men and women, and they intend to bring it to the level of 70 years. Iceland, in fact, is leading among European states in men’s life expectancy rates. 81% of Greenland is covered with ice, all key indicators being higher than in Russia.

Beyond compare, Russia is a unique country, both on its scale and inhomogeneity. Nevertheless, its unique character shouldn’t conceal the lack of political will to take drastic measures. Instead of empty rhetoric about Russia being not ready to raise the retirement age, the government should promote the work culture and self-realization. As of 2016, the average salary in Russia is three times higher than the average retirement payment (RUR 38,590 vs. RUR 13,132) — it might be a motivation for the able-bodied retirement- and pre-retirement-aged people to support the idea of retirement age rise. Ideal rise would be 63 years for both men and women (with a projection to 65, worded, but in the long-term perspective). Time will show the results of this important initiative.