Pensions and social benefits

April 22, 2016 18:20

Seniors are one of the most vulnerable groups in the country. Changes in the pension system as of October 1st, will postpone the retirement age. However, these moves are far from being considered a full pension reform.

As of October 1st, a progressive scale of delayed retirement took effect. Those who continue working beyond retirement age have the following net increase in future pension: for the first year on the same conditions by 6%, for the second by 8%, for the third by 10%, for the fourth by 12%, for the fifth and subsequent years by 14%.

These measures were meant to: 1) to mobilize additional labour resources. In some regions, for instance, in Brest region, the volume of pensioners is 1/3 of the region’s population; 2) to improve pensioner’s financial situation. In practice, the state is incapable to provide all the declared social benefits. As a consequence, pensioners and social benefits recipients make up the low-income social group.

The average old-age pension at the moment is BYR 1 721 thousand; disability pension is Br 1 509.7 thousand, breadwinner’s loss pension is Br 1 090.8 thousand, social pension is Br 782.4 thousand. Some social benefits have symbolic value. Targeted social assistance per month does not exceed USD 25.

According to the National Statistics Committee, the real pension size (pension, calculated taking into account changes in consumer prices for goods and services) in August 2012 compared with August 2011 increased by 38.8%.

At the same time, in practice the situation is quite the opposite. Despite thrice increase in the current year, the pension size actually stayed at the same standard it was before the devaluation in 2011: USD 204 against USD 202 today. Given the prices growth during this period, not only in rubles, but also in US Dollar terms, pensioners and retired do not leave the elementary physical survival zone.

It is believed that the average pension is more than double the amount of the minimum subsistence budget (minimal subsistence budget for pensioners is BYR 697 280), but experts say, that in the last quarter the pensions’ real purchasing power decreased by 5.4 per cent due to higher prices on essential goods and services. The following rise in pensions and benefits, scheduled for November 1st, will slightly increase pensioner’s incomes. However that will not substantially change the overall picture.