By IPS Correspondents
MOSCOW, Feb 2 2000 (IPS)

In a move seen by political analysts as an attempt to harness the votes of Russia’s 38 million pensioners, acting president Vladmir Putin has ordered a 20 percent increase in pensions and clearance of all arrears.

A presidential decree signed by Putin, who took over from ailing Boris Yeltsin on Dec 31 stipulates the increase to be effective from Feb 1. The average pension is now 22,7 US dollars a month.

With the Mar 26 presidential elections looming analysts say the government is desperate to win the crucial support of the country’s pensioners.

With a background of Soviet era tradition of de-facto obligatory elections, the elderly are regarded as the country’s most disciplined voters and usually show up en masse at the voting stations.

Putin was quoted in the local media on Feb 1 as saying that the government was going to tackle pensioners’ issues on a regular basis regardless of the considerations of current politics.

Sergei Kalashnikov, Minister of Labour has attributed the increase in pensions to “improved tax collections” and promised further increases within the next few months.

Russian pensioners have been among the hardest hit by the country’s painful transition to market economy. Mainly elderly people lost their life savings almost overnight in late 1991 when hyper-inflation wiped out the deposits in the state-owned saving bank. The plight of the pensioners was further worsened with the economic crisis of Aug 1998 and ruble devaluation.

The poverty datum line in Moscow is estimated at approximately 2,000 rubles per month.

Before the Aug 1998 economic crisis the average pension in Russia was 30 percent above the official subsistence level. Now it is two thirds of the subsistence level.

The chairperson of Russia’s Pension Fund, Mikhail Zurabov, says that while he concedes that the pension levels are extremely low the pension system is not responsible for the country’s economic woes. “If we have an average salary below 2,000 rubles, how can we have high pensions – the abnormal wages reflect the pension system,” he says.

The state-run pension fund gets a 28 percent tax paid by employers and a one percent tax imposed on employees.

Furthermore over the years pensions in most Russian regions have been two or three months in arrears due to the inability of regional authorities to clear the debts. Elderly people without residence registration are unable to get their pensions and as a result over one million pensioners do not receive pensions at all.

Last September Putin announced that the government had cleared all pension arrears and according to official statistics over one billion US dollars in arrears was paid.

In 1999 roughly one third of Russians, mainly pensioners, were reported to have incomes below the poverty line. Now some 2,7 million Russians are reported to be getting minimal pensions of 14,3 US dollars (410 rubles) a month.

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