RUSSIA: Campaign to Elect New President Begins

By Kester Kenn Klomegah Reprint | | Print |

Kester Kenn Klomegah

MOSCOW, Jan 30 2008 (IPS) - The political campaign for election of a new president has begun, with President Vladimir Putin setting social policy as the tone for his party candidate.

Putin has asked the State Duma, the lower house of legislators dominated by his party, to back a pension indexation and reform bill to benefit low income groups and millions of impoverished pensioners.

“We must do away with pensioners’ poverty in the next few years, raising the average level of pensions above the subsistence minimum,” Putin told a meeting at the upper house of parliament last week. “And we must bring the level of pay in the social sector to the average pay level in each region.”

Russian first deputy prime minister Dmitry Medvedev, the Kremlin backed presidential candidate, says the current pension system is “very unsuccessful”, and that authorities should begin reforming the entire pension system this year.

Medvedev has 78 percent support, according to a public opinion poll conducted by the Levada Analytical Centre in Moscow and published earlier this month in Vedomosti, a widely circulated local business newspaper.

“The pension system is really complicated. We are aiming to change this system, and we will do this carefully, so as not to unbalance anything,” Medvedev said in his first campaign tour to the regions.

Medvedev is also in charge of special national projects which include agriculture, healthcare and education. His social sector projects, popularly referred to as Plan Putina, have been incorporated into the presidential election campaign.

According to sources at the Russian Ministry of Finance and Economic Development, average monthly labour pension grew slightly by 300 roubles (about 12 dollars) to 1,560 roubles (about 65 dollars) in December 2007. Pensions will increase again this year once new legislation is approved.

The new measures will benefit hundreds of thousands of poor citizens who had not previously paid enough into the system to receive a pension – including many women who never held a formal job but have worked for years at home.

In October last year Putin also vowed to resolve the problem of military pensions, underpaid from 1995 to 1998, by the end of 2007. Putin made the promise during a televised question-and-answer session in response to a question by a retired military officer.

The Defence Ministry declined to give further information on service pensioners when contacted by IPS.

The Federal Statistics Department has said Russia has in all 38.3 million pensioners in a population of 143 million (27 percent).

“It’s a universal problem,” Alina Ananieva, spokesperson for the ING Group, the Dutch pension fund that operates banking, insurance and financial services in more than 50 countries including Russia, Ukraine and Kazakhstan told IPS. “Every employee is very much concerned how economically secured they will be after retiring from active employment. If measures are taken in time by the employers (in the private and public sectors), there will not be a serious crisis in the pension system.”

Moves by authorities to increase social spending, that includes indexation of pension payments, is a progressive step to finding a solution to the economic difficulties facing low-income pensioners, she said.

But people are looking to more than a campaign promise. “The need for reform of the pension system is necessary because the real value of pensions is rapidly eroded by inflation,” Dmitry Badovsky, researcher at the social research centre of Moscow State University told IPS. “The average level of pensions today is meagre, taking into recognition the cost of living and the periodic increase in consumer and service costs.”

This is in line with the familiar view that inflation is a tax on the poor. In any case, new offers can only partly cover the rise in real expenditure, Badovsky says.