Russian Ministry of Finance Offers Pensions Separately from Inflation

Pension fund costs are growing due to indexation of pensions. 20.May.15 5:46 PM By Abigail Richards Photo Toinnov.com    473

Ministry of Finance offers refusing from traditional scheme of pension indexation with the link to inflation. According to representatives of the Ministry Pension Fund meets serious cost growth due to indexation which results in budget deficit. The deficit is caused by the fact that salaries are not high enough to cover the costs of Pension Fund. It can lead to negative consequences and eventually burst the whole pension system in Russia. Deputy Minister of Finance Maxim Oreshkin is sure that new method will make it possible to save up to $6 billion for the budget in 2015. It is also known that Ministry of Finance offers reduction of several budget items including current governmental programs by 5% in 2018. At the same time representatives of the Ministry say that all further reductions of pensions, insurance and other social items are unacceptable. The level of costs should be estimated according to current situation. It includes not only oil price which is $70 per barrel in long-term perspective. On the other hand some experts say that now is not the best time to change pension system as it can have a negative effect on income of Russian citizens.

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