The current age at which state retirement pensions kick in is a political hot topic in many countries. With ageing populations and relatively fewer younger taxpayers to shoulder the burden, governments are trying to determine how to reduce the economic cost of the growing elderly population. One cost saving measure is to raise the retirement age, but for many political parties doing so risks alienating a large number of motivated voters: those nearing retirement.
In New Zealand, for instance, the previous prime minister pledged to resign if his government ever raised the pension age (currently sitting at 65 years for men and women and not means tested). The arguments for raising the pension age are not only that many societies’ population pyramids are getting more top heavy, but that the current pension age is too low since life expectancies have increased.
These arguments seem to have struck a chord with the Russian government which has announced that the state pension age will rise in the next 10-15 years. By 2028, the pension age for men will have risen from 60 to 65, while that for women will rise to 63 from 55 by 2034. The current life expectancy for men in Russia is 65.3 for men and 77.1 for women. Such a move is probably an economic necessity in a country which is facing a declining working age population.
Lessening an entitlement will always bring out critics and some are questioning the timing of this announcement: there is a little thing called the 2018 Football World Cup underway in Russia at the moment. The World Cup is a perfect distraction if a government were trying to bury a piece of unpalatable news. Others have argued that the proposed male pension age (which will rise to 65) is too high: data from the World Bank suggests that 43 percent of males in Russia will not live to see a ruble of their pension.
But as the government notes, demography and economic imperatives do not stand still and changes to the pension age have not been made in a “fairly long period”. According to the Russian Prime Minister Dmitry Medvedev, Russians are so different from thirty years ago. “People these days not only live longer, they stay active longer too. A retirement-age person 30 years ago and today are simply different people”.
In the coming years, many countries will, I think, follow Russia's path and will raise the pension age. It makes sense to do so now in a gradual and clearly-signalled way rather than delaying until the change must be done rapidly. I imagine this announcement in Russia will quickly be forgotten, if that country wins the World Cup!