Starting from October 1, 2023, military pensions and salaries of police officers, law enforcement and internal affairs bodies, the Russian National Guard, customs, the penal system and the federal fire service will increase by 10.5%. Those serving in the military can also expect increased payments. The size of pensions for these categories of Russians will increase to 40 thousand rubles. Payments will also increase for pensioners with dependents – an additional payment of 2.5 thousand rubles per month will be made for each of them.
According to Bessarab, all planned indexings will occur on time.
“According to the Social Fund budget draft, the pensions of retirees who are not working in 2024 will be indexed by 7.5% according to the inflation rate in the macro forecast of the Ministry of Economy. At the same time, insurance pensions for non-working pensioners will be indexed from January 1, and social pensions from April 1, 2024,” the press service of the Ministry of Labor of the Russian Federation told socialbites.ca.
Bessarab noted that if inflation is high, the size of the increase in payments may be larger.
“There is already an example where inflation is higher and pensions rise above the planned level,” the parliamentarian said.
According to Bessarab, the exact amount of the 2024 retirement indexation will become clear in October.
“I hope so. We are already working on it. In general, until 2023, pensions of military retirees will increase by 10.5%. In 2024, the pension will be increased from January 1. And from 2025, the pensions of non-working retirees will be increased by February 1 and April 1 It is planned to increase it twice a year, starting from February 1 – according to the level of real inflation, from April 1 – according to the level of income,” Bessarab explained.
The parliamentarian added that the decision was aimed at increasing the income of retirees.
“It is clear that such a proposal will be approved by the government only if the budget deficit is reduced, which, according to the latest data, will be at the level of 3 trillion rubles by the end of this year,” the professor said. Department of Finance and Prices, Russian University of Economics. GV Plekhanova Yulia Finogenova.
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How comfortable is the increase?
Sovcombank chief analyst Natalya Vashchelyuk noted that inflation pressure remains high: in 2023, prices may increase by 7.5%, and in 2024 by 5.5%. The analyst believes that in the absence of macroeconomic shocks, inflation will likely return to 4% in 2025.
According to him, the indexation of military pensions in 2023 will almost certainly exceed inflation, reaching 10.5%, and inflation is expected to be 7.5%. Vashelyuk said that regular insurance pension indexation for non-working retirees in 2023 is relatively low. Payments have increased by 4.8% since January 1, 2023. But the increase in pensions in 2022 was larger than usual: payments were increased twice, by 8.6% from January 1 and by 10% from June 1.
Vashchelyuk explained that as a result, the amount of indexation in 2022-2023 will probably exceed inflation. According to him, he added that the indexation will also be above inflation, considering the 7.5 percent increase in pensions in 2024.
From January 1, 2024, when the index is 7.5%, the average pension can be 23.4 thousand rubles.
“Inflation could “eat up” much of the increase in pensions. Even with an increase of 10.5 percent, for example if inflation is 8 percent, the real increase in purchasing power will only be around 2.5 percent,” said economist Daniil Kleshko.
In order to ensure a real improvement in the financial situations of retirees, this issue should also be taken into account in the indexing in 2024 and 2025.
“A pension of 50 thousand rubles might be fair for Russians. This money will be enough for retirees to cover only housing and communal services, medicines and the minimum food basket,” says economist Andrey Loboda, BitRiver’s director of communications and CSR.
How can you increase your income in retirement?
According to Finogenova, today’s retirees find themselves in a difficult situation because they do not have the opportunity to participate in individual savings pension programs with support, since they started their careers in the Soviet period and continued in the “crazy 90s”. of the state or employer.
“In those years, there was no state-supported long-term savings program. When it appeared in 2002, it was primarily aimed at citizens born in 1967 and younger,” the economist explained.
Alexander Bakhtin, investment strategist at BCS World of Investments, believes that the size of pension indexation should help offset the impact of inflation. More precisely, he explained that the official indicator of price growth, not real inflation, is that the difference between them can exceed 5%.
“Ideally, a person entering a well-deserved retirement should be considered comfortable in a situation where his income level does not noticeably decrease and his quality of life does not decrease. This can be achieved by independently creating retirement savings for yourself in advance, investing regularly from existing income, or earning additional income in retirement, for example by renting living space,” the expert said.
According to Vashchelyuk, banks now offer very high interest rates on deposits and savings accounts. The average maximum rate for deposits for up to three months at the beginning of September was about 9% per annum, for a period from 3 to 6 months – 10.2%, from six months to 1 year – 8.5% for a period of more than 1 year. – 9.6%.
“Therefore, you can use regular banking products to save and grow money in retirement,” says Vashchelyuk.
Olga Daineko, an expert at the Financial Research Institute of the Ministry of Finance of Russia and the MyFinance.rf portal, reminded a few more ways to increase your income in retirement. The first option is to find a part-time job. The teacher stated that you can become a nanny, grow plants and vegetables/fruits for sale, and make homemade semi-finished products and candies.
According to Finogenova, at the beginning of 2023, approximately 8 million retirees were officially registered as working retirees, but this number is likely higher when informal employment is taken into account.
Alternatively, you can ask the children to cover some of the costs themselves, says Daineko.
“You can ask the future heir of an apartment or cottage to help pay the utility bills. Alternatively, consider signing a maintenance, or life annuity, contract with a dependent from whom you can receive monthly payments. But you need to choose the rental candidate very carefully: it is better if he is a relative,” emphasized the expert.
Daineko explained that in some cases, an annual income may be preferred to an inheritance, other heirs will not object to this, and the person receiving an annual income will not be left neglected.
“You can open an individual investment account. Non-state pension insurance programs will allow you to count on a second pension. A long-term savings program will be launched next year with co-financing from the state. “It can become an alternative tool to save money and save money,” the expert concluded.
Konstantin Kharchenko, associate professor of the Department of State and Municipal Administration, says that in addition to indexing pensions, the state should also expand the forms of social support for people of retirement age – according to their labor value and degree of participation in public life. Financial University under the Government of the Russian Federation.
For example, this could be the introduction of electronic discount cards, as well as compensation for housing and communal services, public transport, treatment, theater visits, concerts and museums (many of these options have been lost during the pandemic), and so on. He listed the social card that Muscovites can use when purchasing certain goods and services from domestic producers.
“In this way, pension payments will be reinvested in the national economy, creating the necessary market balance as a guarantee of a future increase in pensions faster than inflation,” the economist said.
Source: Gazeta
Ben Stock is a business analyst and writer for “Social Bites”. He offers insightful articles on the latest business news and developments, providing readers with a comprehensive understanding of the business world.