Pension system. How to ensure a decent living at old age

7 февраля 2016

Sergei Volyak: Working in a civilized way also means paying taxes in order to enjoy the right to go to a doctor or to take the children to school.

And it also means ensuring a decent living at old age.

The pension system we have was inherited from Soviet Union. And in its fundamental part it remained unchanged. At the heart of it there is a so-called "principle of solidarity of generations." This means the money that we now earn are used to pay pensions to current pensioners.

A pension for the ones working today will be paid from the contributions made by their grandchildren, great-grandchildren. If nothing is changed grandchildren and great grandchildren will have to work very intensely to support retirees.

In 2050 such system will be impossible. People will simply not be earning so much.

If in 2013 the cost of the pension fund is 9% of GDP, by 2050 it will account for 20% of GDP. And if someone thinks that 2050 is a too distant prospect, I stress, this is the extreme point, when the pension system is already in a state of paralysis. But we will start to feel the disproportion of pension payments much earlier.

This is very clearly stated in the study "Financial Diet", which was presented this week.

Ekaterina Bornukova, lead researcher of the Belarusian Economic Research and Education Center:

"We feel that if nothing changes in the pension system of Belarus by 2020, the deficit budget will be 2% of GDP. This is very important. This is comparable to the cost of education and health. This is a huge deficit."

In Russia it is planned to raise the retirement age to 65 for both men and women.