Russian pension reform hits vulnerable age group of over-50s

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In this photo taken on Tuesday, Sept. 4, 2018, Marina Grigoryeva, 52, speaks during an interview to the Associated Press in Moscow, Russia. Grigoryeva, who has worked for the Moscow City Telephone Network for nearly 30 years, has been out of job since February and knows that work for 50 year olds is hard to be come by. Before, she was thinking that she could rely on the old-age pension that would kick in in three years. (AP Photo/Pavel Golovkin)

When 52-year old accountant Marina Grigoryeva was laid off this year, she figured that at least she would be eligible for a state pension in three years' time. But measures announced by President Vladimir Putin last week mean that Grigoryeva, who has been looking for a job for over six months, will have to wait eight years instead.

A planned hike in the retirement age yanks away the safety net for millions of Russians in their 50s, core Putin supporters who struggle to hold down a job, let alone find a new one, and have come to rely on pensions as a meagre but secure source of income at a time of economic uncertainty.

"You can't get by on the benefits at all," said Grigoryeva, who has worked for the Moscow City Telephone Network for nearly 30 years. She is entitled to 5,000 rubles ($73) a month in unemployment benefits, which is half what the government says is the minimum subsistence level. And it's only a tenth of the average salary in Moscow, where she lives.

A recent opinion poll shows Putin's approval ratings crashed this summer following the announcement of the pension reform, while an increasing number of Russians say they are ready to take to the streets to protest it. The president even made a televised address to the nation to explain the need for a higher retirement age and announce some concessions.

Putin had initially tried to keep a distance from the politically sensitive proposal. It was announced instead by Prime Minister Dmitry Medvedev in June — on the day the World Cup kicked off in Russia.

The plan was initially to raise the pension age by eight years to 63 for women and five years to 65 for men by 2023, though the increase for women was eventually trimmed to five years.

The reform is Putin's most unpopular move in more than a decade. A recent survey by the Levada pollster shows that 53 percent of Russians are ready to protest against the amendments and that 77 percent would vote against them at a referendum. The surveys were held in July and August, with a margin of error of 3.4 percentage points.

The outrage stems in part from the fact that life expectancy in Russia lags that in Europe or the United States, with the proposed pension age for men just two years below the life expectancy of 67. It is also due to the fact that Russians over 50 are finding it increasingly difficult to keep a job or find a new one.

For the public finances, the hike in the retirement age was long overdue. As the workforce shrinks, the government spends more on pensions every year, earmarking 3.3 trillion rubles ($48 billion) in 2018, even more than on defense.

Yevgeny Gontmakher, who served as a top adviser to Medvedev when he was president, says the proposed changes are a "big mistake" because they will sideline lower income Russians who rely on state pension as an important source of income.

"This is big for millions of Russian families," he told The Associated Press. "All of a sudden these people will have lost nearly half of their (expected pension) incomes."

In his televised address, Putin warned that without such a move, the pension system "would crack and eventually collapse." He offered assurances that the state will take care of the over-50s, including a vague promise of jobs, and wrapped up his speech with: "I'm asking you to be understanding of this."

The reform and Putin's address became fodder for jokes and Internet memes. One shows a thug demanding money from a passer-by, who screams "But that's a robbery!" To which the robber goes: "I'm asking you to be understanding of this."

Putin proposed amendments to soften the reform, including benefits like free public transport for some and early retirement for law enforcement officers, a move that Gontmakher says will undermine the goal of saving money.

55-year old Pavel Pershin, who registered as unemployed for the first time this year, says he would not be thinking of retiring if the job prospects for someone his age were not so grim. Jobs in the private sector, where Pershin earlier worked for over 25 years ago in an airplane engine factory, are drying up in an economy battered by Western sanctions and a weaker ruble.

"If the economy was growing well, then yes, raise the pension age all you want," he says. "I'd love to be able to pay (taxes) if I was able to find decent work, but I don't want to go and work as a janitor or a moving man."

Since the collapse of the Soviet Union, the Russian labor market has favored workers in their 30s and early 40s, with incomes and job opportunities declining rapidly for people in their 50s, says Marina Kolosnitsyna, economics professor at the Higher School of Economics in Moscow.

Many highly-skilled professionals with university degrees who lose their jobs in their 50s end up working as street cleaners or janitors, says Kolosnitsyna.

Russians, meanwhile, are growing weary as the economy sags. A poll by the Levada pollster released Thursday showed that 48 percent of Russians are worried of losing their job, up 15 points from a year earlier. The unemployment rate is at a record low below 5 percent, but that statistic does not count people who do not both to register for unemployment benefits, which are meager. And employment does not guarantee a good life, either: about 5 million Russians have jobs that pay less than the subsistence level of about $150 a month.

The political opposition to Putin is hoping to capitalize on the unpopular policy. Opposition leader and anti-corruption campaigner Alexei Navalny has announced nationwide protests in dozens of cities on Sunday, though he will be unable to attend because a Moscow court has sent him to prison for a month.

Accountant Grigoryeva recalls being "speechless" when the retirement change was announced, which in her mind shows that the Kremlin was advocating "policies completely against the interests of the people." She has never been to a rally but now is entertaining the idea of taking to the streets.

She says she would love to keep working as long as she can but the question looms for many Russians who are simply too ill to work in their early 60s: "Those who have no energy left... How are they going to survive?"

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Francesca Ebel contributed to this report.