Hour of additional payments: indexing pensions to the inflation rate will require another 150-200 billion

Indexation of insurance pensions in 2022 at a level not lower than actual inflation will require additional funding in the amount of 150-200 billion rubles, experts calculated at the request of Izvestia… The fact that the authorities would take such a step was announced on December 23 during a big final press conference by Vladimir Putin. From January 1, pensions will be indexed by 5.9% laid down in the budget, and after amendments to the legislation, pensioners can be compensated for the difference with inflation, the State Duma suggested…

Above inflation

At a large December press conference, President Vladimir Putin reiterated that the government in 2022 should index insurance pensions above inflation.… It is expected that by the end of 2021 it will be 8%, which is twice the target, he said. According to the latest data from Rosstat, annual inflation has already reached 8.22%. At the same time, the adopted law on the budget of the Pension Fund provides for the indexation of pensions by only 5.9%…

According to Izvestia’s calculations, the additional costs next year will amount to at least 154 billion, based on inflation of 8.22%. The correctness of the calculation method was confirmed by experts from Moscow State University and ACRA…

Director of the Sovereign Ratings and Macroeconomic Analysis Group ACRA Dmitry Kulikov estimated the need for additional appropriations at 150-160 billion rubles, and the chief economist of Expert RA, Anton Tabakh, at 150-170 billion… And these are the most conservative calculations. With inflation of 8.5%, additional financing should be at least 212.7 billion, according to the analyst of the department of trade operations in the Russian stock market “Freedom Finance” Alexander Osin… These figures do not affect military pensions.

As Yaroslav Nilov, head of the State Duma Committee on Labor, Social Policy and Veterans Affairs, explained to Izvestia, there are various options for increasing the level of pension provision, but the most logical of them is the mechanism of compensation “retroactively”… From January, pensions will be indexed by 5.9%, as provided by law and laid down in the budget. Then the law on insurance pensions will need to be adjusted, on the basis of which the index will be brought to the level of actual inflation with mandatory compensation for the lost part, the parliamentarian suggested.

Amendments to the Pension Fund of the Russian Federation can be made in the spring, the deputy expects. Yaroslav Nilov also did not rule out the prospect of lump-sum compensation payments, although, according to him, this would contradict the law securing annual indexation not lower than the inflation rate…

Izvestia contacted the Ministry of Labor, the Ministry of Finance and the Pension Fund of Russia with a request to estimate the possible amount of additional costs.

Good macroeconomics

In addition to the indexation of pensions and inflation, during a press conference, the President assessed the effectiveness of the financial authorities, touched upon the topics of Russians’ incomes, an increase in the key rate, housing construction and Rusnano’s debts.…

The work of the government and the Central Bank, according to him, deserves a “satisfactory assessment” – by the end of the year, GDP growth is expected at 4.5%, and the real incomes of Russians should grow by an average of 3.5%, but at the same time “far from all categories of citizens “. At the same time, the unemployment rate fell to 4.3%, which is below the pre-pandemic indicators.

“Everything speaks of stability and good macroeconomics,” Vladimir Putin emphasized.

The President also assured that he did not interfere in the policy of the regulator and defended the key increase. Without such a step, the economic situation in Russia could have gone according to the Turkish scenario, where the lira exchange rate collapsed at a record after the interest rate cut, the head of state warned.

Vladimir Putin also named three “growth drivers” of the Russian economy “: saving the people, increasing labor productivity and developing infrastructure.…

The head of state did not ignore the resonant situation with the debts of Rusnano. The company, in his opinion, is generally viable, but it should generate income. At the same time, state guarantees for Rusnano loans must be fulfilled, and the new management of the company “has carte blanche” to deal with the debt, the president said.

Economists interviewed by Izvestia were divided in their assessment of the actions of the Central Bank. According to the head of the financial research laboratory at the Institute for Economic Policy named after E.T. Gaidar Aleksya Vedeva, Bank of Russia raised the rate too highgiven that most of the inflation is dictated by non-monetary factors. The tightening of monetary policy will force the Ministry of Economic Development to revise its macro forecast for the worse in the spring. The expert said that it is unlikely that it will be possible to achieve the 3% growth projected by the department in 2022: in reality, the economy will grow by 1.7-2.2%. But it is quite possible to approach the inflation target: by the end of 2022 it will be 4.2%, believes Alexey Vedev.

The Central Bank is acting correctly, according to the classical scheme: when inflation accelerates, you need to make money more expensive, objected Igor Nikolaev, director of the Institute for Strategic Analysis of FBK Grant Thornton… The Turkish central bank is doing the opposite and is trying to fill the fire with gasoline. However, raising the rate alone will not solve the problem: it is more dependent on non-monetary factors such as competition, regulation, supply and world prices.