The Daily Update - Putin a Dampener on Pension Reform

“None of them” was Russian President Vladimir Putin’s response to questions regarding his preferred pension reform option, “Why? Because [raising the retirement age] cannot be pleasing to the overwhelming majority of our citizens”. Indeed, they have proven to be very unpopular. Public outcry against proposed pension reforms – that include raising pension ages from 60/55 to 65/63 for men and women respectively – has been pronounced with tens-of-thousands at various protests since their announcement in mid-June; Putin opinion polls are at their lowest in years. Some indicators put his approval ratings at the lowest in almost four years following the recent sharp drop from above 80% to now ‘just’ 67%.

Yesterday, in response to the umbrage, Putin softened his stance suggesting that his government’s proposal to parliament was not a “final decision” and advocating for reforming pensions “cautiously and in a balanced way” that is “fair and takes citizens’ interests into account”. But he also warned that if nothing is done, longer-term “either the pension system will collapse, or the budget from which we finance the [pension] deficit will collapse.”

So today, even in the face of this broad disapproval, Putin was unequivocal that “modernizing the pension system” (as Russian state-media would say) has already been delayed for “years” making reforms now “essential” as Russia’s working age population continues to shrink. Putin thus gave his support for a gradual five-year increase to both pension ages, conceding from the eight-year increase originally suggested for women (who in Russia have a life expectancy of 77, on average, 11 years higher than men). This along with proposals to raise value-added-tax are seen by many as essential to improve the country’s finances which remain under the strain of sanctions.

Many-a-time during his 18-years as leader Putin has said that raising the pension age would not happen during his tenure. His strong-man reputation will be tarnished if he is seen pandering to parliament or even to economics; opposing malcontents like Alexei Navalny will continue to swarm on such vulnerabilities with more national protests planned for the 9th of September. The limitations of economic reality are always a dangerous thing for political will and public opinion.

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