The Kremlin pushes pension reform, but the Russian public pushes back

It is potentially the biggest political challenge for the Kremlin since 2005.

That was the year that the government's plans to reform the Soviet-era system of social benefits were derailed by mass disobedience from veterans and pensioners. It is probably the memory of those protests that has kept Russia from considering raising its pension ages for more than a dozen years.

But now, the long-taboo issue of pension reform is back on the table. A law working its way through the State Duma, the lower house of parliament, would significantly raise the pension age for retiring Russians as early as next Jan. 1. And like a surprise summer storm, the proposal has shattered Russia's social peace.

Thousands of people have demonstrated angrily in Moscow and other Russian cities in recent weeks, debates in the usually sedate Duma have been fierce – with all parties other than the ruling United Russia voting against the bill in its first reading – while public opinion polls show a whopping 9 out of 10 people oppose the reform. It is even stirring a grassroots effort to block the law via popular referendum, the first Russia has seen in 25 years.

“Issues like this should be discussed with people before they decide to impose them,” says Vladimir Kashkarov, a Communist Party activist in the Siberian region of Altai, who has joined an initiative committee with over 100 other local people to gather signatures to demand a nationwide referendum on the reform.

“When a few people in the United Russia party in the Duma can just decide like that for everybody, they have no right to call it democracy,” he says. “People should have their say. And, out here in Siberia, our lives are hard and our salaries are low. People cannot survive without their pensions.”

‘People feel cheated’

The proposed pension reform is similar to those being enacted in some Western countries, and it's been long advocated by liberal advisers to the Russian government. The plan is to introduce a step-by-step raising of the basic retirement age from the Soviet-era level of 55 for women to 63, and for men from 60 to 65.

It was never going to be popular. But it has been put forward now due to a sense that the recently re-elected Vladimir Putin has enough accumulated political capital to push through unpopular decisions like this. And experts assert that the current pension system is unsustainable amid economic stagnation and a worsening demographic situation.

But the abruptness of the measure – coming on the heels of several years of falling real incomes and combined with the lack of any preparatory public discussion about it – appear to have created a social response that the government was unprepared for.

“This plan to change the pension age has become a lightning rod for all sorts of discontent,” says Masha Lipman, editor of Counterpoint, a Russian-language political journal published by George Washington University. “People are upset about corruption, lack of access to health care and other services, high-handed officials who won't give up their own privileges, and, of course, the immediacy of this measure. If someone was planning to retire next year, now they can't. It's really easy to understand a thing like this. Hence this outpouring of anger. People feel cheated, robbed, taken advantage of.”

According to the Russian Federal State Statistics Service, or Rosstat, life expectancy was 66 for men and 77 for women in 2016. There are currently 36 million pensioners in Russia, with 73 million employed people. But, due to the collapse of birthrates in the 1990s and despite recent improvements, the balance between retired and employed Russians is set to worsen sharply in coming decades.

State contributions to keep the pension fund topped off have been growing for years. Although Mr. Putin has pledged to focus on social needs in his new term, including roads, education, and health care, there is going to have to be belt-tightening and cutbacks in other areas, experts say.

“The main reason the government decided to do this is to reduce transfers from the federal budget to the pension fund,” says Oksana Sinyavskaya, a social policy expert at the Higher School of Economics in Moscow. “But we should be under no illusions that after raising the retirement age, all the problems in our pension system will be solved. We need a much wider package of measures, in the pension system and the labor market. Much depends on how that will proceed in future.”

Softening the blow?

But first the Kremlin is going to have to address the mounting political challenge it has unleashed. Focus groups conducted by the independent Levada public opinion agency found a general mood of dissatisfaction with government priorities that seem to put people's needs last.

“Many respondents felt that change was inevitable, yet they were not quite prepared for it. People admitted that there is no money in state coffers but attributed that to the costs of the 2014 Winter Olympics, the 2018 World Cup, and Russia’s ongoing intervention in Syria. Respondents complained about Russia being ‘too engrossed in defense and military operations in recent years,’ being ‘saddled with Crimea,’ and having to rebuild war-torn Syria,” writes Denis Volkov, a sociologist with the Levada-Center.

“Indeed, the public increasingly believes that the government’s goal is to implement another ‘scheme to take away people’s money.’ The belief that reforms always end up hurting the people emerged during the 1990s, and, nowadays, people speak in similar terms about the pension reform plan,” he writes.

The Russian media is now speculating that Mr. Putin will offer some concessions as he takes to the road to visit various regions this week, to soften the reform and tamp down public reaction.

Perhaps to let off steam, the Central Election Commission (CEC) agreed earlier this month to permit the first referendum in 25 years to take place on this issue, if activists can raise 2 million signatures in at least 42 Russian regions in the next month and a half.

That sounds like it should be simple to do. But activists complain they are not being permitted to register their initiative groups for signature-gathering. The CEC only allows one group per region to collect signatures, and it's been first come, first serve as to who gets to do so in any particular locale.

That leaves the broader referendum effort fractured among multiple groups that aren't cooperating – for example in Moscow, a mayoral candidate named Ilya Sviridov has registered, leaving Communist Party workers furious at being turned away. And some even say fake groups have signed up to stymie the signature effort in some regions.

“Everybody involved, including the Communist leadership, is interested in no referendum taking place,” says Boris Kagarlitsky, director of the left-wing Institute of Globalization and Social Movements. “But nobody wants things getting out of control, with people taking to the streets, so we have to have this charade of political activity. It will go on for some time, and it might even get interesting, but in the end it will be like our elections – with the preordained result being what we have to live with.”