The budget does not have financial resources for putting into practice the Socialist MPs’ legislative proposal to reduce retirement age to 57 for women and to 62 for men. The implementation of this proposal can lead to the failure of the pension system, Stas Madan, senior economist of the independent think tank “Expert-Grup”, stated for IPN.
According to the economist, another reaction to such a law is that the state during many years to come will not have fiscal space for increasing pensions. At the same time, the social insurance contributions will inevitably rise and this is increased pressure on the business community. This will happened even if the pensions are kept at the current level as the extension of the number of budget-funded employees will imply a significant budgetary effort.
Stas Madan said the pandemic amplifies the unsustainability of this proposal. This is unsustainable from financial-budgetary viewpoint even in conditions of normal economic activity, not to mention the pandemic conditions.
“Those who submit such proposals should also propose financing sources and estimate the impact. It sounds nice, but is implausible as society should sustain the costs. In this case, it will be impossible to increase pensions in general in the immediate period as they are at a rather low level yet, even if namely the rise in the retirement age enabled to valorize and raise the pensions of many pensioners. Another cost is the increase in the fiscal pressure on businesses, which is rather high now too, especially in terms of salary taxes,” noted Stas Madan.
The Socialist MPs introduced a bill by which they propose returning to the situation when women retired at 57, while men at 62. According to the proposal, mothers with five and more children will retire at 54. The insurance period taken into account when setting the pension is to also be modified.
In a TV program, incumbent President Igor Dodon said it would be symbolical for him at the end of his term to sign the law by which the previous retirement age – 57 for women and 62 for men – would be restored.
