Russia must raise retirement age to 65 says Finance Ministry

Russia will inevitably have to raise its retirement age to 65, and families should be preparing for later retirement, Deputy Finance Minister Sergei Shatalov said late on Tuesday.

“I do not think we can avoid the issue of raising the pension age,” Shatalov told Echo Moskvy radio , adding people needed time “to get adjusted, get ready, resigned to the idea.”

“Not at once, gradually, in stages, by adding six months, may be by a third of a year annually and after spending about 15 years on it to reach the 65-year threshold for the retirement age.”

Social welfare is Russia’s largest budget expense and it will rise in 2012 by 20 percent to 3.8 trillion roubles ($135 billion), or a third of federal outlay. The government has recently abandoned the idea of balancing the budget by 2015, while economists warn that if the price for oil, the country’s key export, falls sharply and for a long time, the government would be in trouble.

They say that the pension system needs reform, including raising the retirement age, or it may undermine budget stability. The current retirement age for women is 55, and 60 for men, although certain professions have lower retirement ages.

Shatalov said he was sure that the increase in the pension age will be painless.

“If such a gradual decision is taken, the people who are near the retirement age will feel practically nothing,” he said. “And those who are quite young, for them this is a far-away prospective, and I think they will take it with much understanding.”

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