Beginning October 1, 2023, the pensions and salaries of service members and personnel across police, law enforcement, internal affairs, the Russian National Guard, customs, the penal system, and the federal fire service are set to rise by 10.5%. Those in military service will also see higher payments. Pension amounts for these groups will climb to 40,000 rubles, and dependents will receive an additional 2.5 thousand rubles per month for each dependent.
According to Bessarab, all planned indexations are expected to occur on schedule.
“Under the Social Fund budget draft, retirees not employed in 2024 will receive a 7.5% pension increase aligned with the inflation forecast from the Ministry of Economy. Insurance pensions for non-working retirees will be indexed from January 1, 2024, while social pensions will be updated from April 1, 2024,” stated the Ministry of Labor’s press service to socialbites.ca.
Bessarab added that if inflation rises, the boost in payments could be larger.
“There is precedent where inflation ran higher and pensions grew beyond the planned level,” the parliamentarian noted.
For 2024, the precise amount of retirement indexation will be confirmed in October, according to Bessarab.
“We are working on it. In general, through 2023, military retirees will see a 10.5% increase. The 2024 rise starts on January 1, and from 2025 the indexation for non-working retirees is planned for February 1 and April 1, with two annual adjustments based on real inflation and income levels,” Bessarab explained.
The parliamentarian added that the aim behind the decision is to boost retirees’ incomes.
“Any government approval will depend on reducing the budget deficit, which recent data put at about 3 trillion rubles by year end,” noted the professor from the Department of Finance and Prices, Russian University of Economics GV Plekhanova Yulia Finogenova.
How comfortable is the increase?
Sovcombank chief analyst Natalya Vashchelyuk pointed out that inflationary pressures remain strong: prices could rise 7.5% in 2023 and about 5.5% in 2024. If macroeconomic shocks are avoided, inflation may settle around 4% in 2025.
She noted that the 2023 indexation of military pensions will likely exceed inflation, reaching 10.5%, with inflation projected at about 7.5%. Regular insurance pension indexation for non-working retirees in 2023 was relatively modest, up 4.8% since January 1, 2023. In 2022, increases were larger, with 8.6% from January 1 and 10% from June 1.
Vashchelyuk explained that the combined effect of 2022–2023 indexations will likely surpass inflation, especially when the 7.5% pension increase in 2024 is considered.
From January 1, 2024, with a 7.5% index, the average pension could reach 23.4 thousand rubles.
“Inflation could offset much of the increase. Even a 10.5% rise would yield only about a 2.5% rise in purchasing power if inflation runs at 8%,” warned economist Daniil Kleshko.
To secure meaningful improvements in retirees’ finances, indexing in 2024 and 2025 must account for real purchasing power gains.
“A pension around 50 thousand rubles would be reasonable for many Russians, covering housing and communal services, medicines, and essential food,” said Andrey Loboda, director of communications and CSR at BitRiver.
How can you increase your income in retirement?
Finogenova notes that today’s retirees face challenges due to a lack of access to individual savings pension programs, many having started careers in the Soviet era and continued through the tumultuous 1990s.
“When a state-supported long-term savings program emerged in 2002, it mainly targeted those born in 1967 and later,” the economist explained.
Alexander Bakhtin, investment strategist at BCS World of Investments, argues that pension indexation should help offset inflation, focusing on the official price growth indicator rather than true inflation. He says the gap can exceed 5% at times.
Ideally, a retiree should maintain a stable income that sustains quality of life. This can mean building personal savings, investing regularly from income, or earning extra income in retirement, for instance through renting out living space, Bakhtin suggests.
Vashchelyuk points out that banks currently offer attractive deposit rates, with short-term rates around 9%, mid-term near 10.2%, and longer terms near 8.5% to 9.6%.
“Using regular banking products can help grow retirement savings,” she adds.
Olga Daineko from the Financial Research Institute of the Finance Ministry and MyFinance.rf underscores additional strategies: taking on part-time work, such as tutoring, caregiving, small-scale farming, or producing homemade goods.
By early 2023, about 8 million retirees were officially working, a figure likely higher when informal work is counted.
Some retirees may ask family members to share expenses or arrange maintenance or annuity contracts with dependents to receive monthly support. Careful selection of rental or dependent arrangements is advised.
Daineko adds that for some, annual income arrangements can be preferable to outright inheritance, reducing disputes among heirs.
Opening an individual investment account and exploring non-state pension insurance can provide a second pension, while a forthcoming long-term savings program with state co-financing could become a practical savings avenue.
Konstantin Kharchenko of the State and Municipal Administration department argues for broader social support tied to retiring workers’ contributions and public involvement.
Ideas include electronic discount cards and compensation for housing, transport, healthcare, theater visits, concerts, and museums, reinstating benefits that were reduced during the pandemic. A social card for Muscovites, for example, can assist purchases from domestic producers.
Kharchenko notes that reinvesting pension payments into the national economy could help maintain growth and allow faster pension increases above inflation over time.