Диссертация (1137741), страница 7
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As a result, in the low forecast thereare fewer taxpayers per one retiree. This means a higher coefficient of demographic burden.The risks linked to this scenario include the fact that higher economic growth is less likely tooccur with the decreasing population in all three age categories.Finally, the high demographic forecast assumes a 7% increase in population from 2017to 2035 (Figure 1.11). However, as in the median and low demographic forecasts, the trend onthe increase of population over working age can be reversed only with an increase of theretirement age for the whole population.23An average increase of population over working age is lower by 0.14 million persons during 2017-2035.29504744157Without pension reformWith reform for civil servants (since 2017)With general reform (since 2019)Population (right-hand scale)15415141148381453514232139292010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034136Figure 1.11. Overall population and population over working age in thehigh demographic forecast under different pension reforms, mln.
per.Source: Rosstat, authors’ calculations.1.3.2. Recent pension reforms in RussiaRussia, as opposed to most other countries, did not implement pension reforms from theend of 2000 to the beginning of 2010, but started to conduct reforms over the past few years.Since 2014, an insurance part of the pension has been “frozen”. 24 Official estimates suggestthat this measure allows a cut in intra-budget transfers to PFR, and reduces the overall budgetdeficit by approximately 0.4% of GDP annually.
At present, there is a discussion aboutpension reforms with the Ministry of Finance and the Bank of Russia taking the lead inproposing to encourage employees to self-save. In this chapter we do not discuss this issueand do not assume an additional burden on budget spending from the insurance part of thepension.Since 2016, the indexation of pensions of working retirees has been stopped.
Thisdecision may de-stimulate the continuation of working activity by retirees. For scenarioswithout an increase in retirement age we assume the share of working retirees equals 39%,and average seniority after retirement of 5 years, which corresponds to current levels 25.According to our estimates, this measure has allowed the government to decrease pensionspending in 2016-2017 by almost 100 million rubles annually, or by 0.1% of GDP.
In the24Social contributions paid by employers form the security part of pensions for the current retirees, whileinitially these contributions were supposed to constitute the funded part of the pensions.25According to the official Rosstat data at the beginning of 2016 the share of working retirees was 39.9%, whilethe average working time after retirement was 4.9 years.30following years, if this remains in place, it will continue to limit the growth of pensionpayments.
The resumption of pension indexation will mean the return of pension expenditureson the same path as they were without this measure within five years: it will not apply to newretirees, while those who retired previously and continue to work will gradually finish theirworking period and receive an indexation for the years of its absence 26.Further, since 2017 an increase in the retirement age of public servants has started.
Itapplies an increase of half a year each year. However, due to the relatively low share of publicservants in the total employed population (only 3%), the impact of this measure on pensionpayments from the budget would be modest (Figure 1.9, Figure 1.10, Figure 1.11).At present the discussion of the extension of this reform for the entire population is onthe way. This reform should start in 2019, with an increase in the retirement age by half a yearper year to 65 years for men and 63 years for women.
27 The transition period will last through2028 for men and 2034 for women, while for public servants it will take two years less. Thismeasure would allow changing the trend of population over working age, decreasing it by 0.5,0.4 and 0.2 million persons on average per year in the low, median and high demographicforecasts, respectively (Figure 1.9, Figure 1.10, Figure 1.11). The absolute value by 2030would be equal to the one registered around 2010. By 2035, when the reform is completed,the growth of the population over working age will continue.According to our estimates, an increase in the retirement age with a correspondingdecrease in the number of retirees will decrease the share of working retirees by 2035 from39% to approximately 24% due to their inclusion in the working age population.1.3.3.
Challenges for public financeFrom 2013-2017 retirement pension expenditures increased by almost 1 p.p. of GDP to6.9% of GDP, and their share of general government total expenditures reached almost 20%.The reason behind this dynamic is fast growth in the number of retirees (0.85 million per yearon average) and pension indexation (7.5% on average) against the background of loweconomic growth (0.3% on average). However, recent reforms backed by relatively lowindexation of pensions in 2016 and 2017 (correspondingly 4.0% and 3.9% with inflation atthe end of 2015, and 12.9% and 5.4% at the end of 2016) had allowed a slowdown in thegrowth of pensions spending. With the adjustment on the one-time payoff of 5000 rubles in26In reality the impact could be less linear than we assume in our estimations. This could probably stimulate anearlier retirement but we do not take this into account due to the complexity of such estimates.27Decree of 16.06.18 №1192-р.
“Submitting to the State Duma a draft law on the changes of pension provision”.31January 2017, retirement pension expenditures in 2017 stood at the 2016 value of 6.7% ofGDP.The increasing number of retirees and the smaller working-age population leads to anincreasing deficit of PFR adjusted for inter-budget transfers. The proportion of these transfersmaking up the total income of PFR continues to increase: after a small decrease in 2014 to39.2% it grew to 45.0% in 2017 (Figure 1.12).28 The amount of transfers continues to rise aswell: from 3.0% of GDP in 2014 to 3.9% of GDP in 2016. In 2017, taking into account a onetime payment in January, a further increase in the size of this transfer can be expected.9 0008 000Revenue of the PFRExpenditure of the PFRTransfers share in income of the PFR (right-hand scale)90%80%7 00070%6 00060%5 00050%4 00040%3 00030%2 00020%1 00010%00%2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Figure 1.12.
Revenues, expenditures and the share of intra-budgettransfers in total revenues of PFRSource: Rosstat, authors’ calculations.In the long run, the absence of an increase in the retirement age for the entire populationdoes not mean an automatic increase in the risks to fiscal sustainability from the pensionsystem. However, taking into account the other challenges to public finance in Russia we seeroom for a more active policy.
In the long run, the Russian budgetary system could face asignificant decrease in revenues to GDP, mainly due to the decrease of oil and gas revenues,which should grow at a rate lower than the growth rate of the nominal GDP. In the draft of theFiscal Forecast for the Russian Federation through 2034, the Ministry of Finance expectsgeneral government overall revenues to fall between 2018-2034 by 3.4 p.p. of GDP.28In 2014 the transfer size decreased due to the freeze of the accumulative part of pensions.32According to our estimates, maintaining long run fiscal sustainability in Russia 29implies a primary fiscal deficit of 0.7% of GDP at an economic growth rate of 3%, and 0.4%of GDP at an economic growth rate of 1.5% per year 30 (Figure 1.13).
To keep the net debt atthe current relatively low level of 9% of GDP, the primary balance should be close to zero.These estimates conform to the current fiscal rule for the federal budget based on a long runprimary balance at zero and the policy of the Ministry of Finance designed to maintain theregion’s budgetary deficit near zero.6.0304.5253.0201.5150.010-1.55Primary balance (growth at 3%)-3.0Primary balance (growth at 1.5%)-4.50-5Net debt (right-hand scale)-6.0-10200720122017202220272032203720422047Figure 1.13.
General government primary balance allowed for net debtincrease up to 30% of GDP in 2050Source: Treasury of Russia, Russian Ministry of Finance, author calculations.In the future it is, therefore, required to at least not increase the general governmentprimary deficit (0.6% of GDP in 2017), which means decreasing public expenditures to GDPalong with its falling revenues. The cut of pension spending to GDP can contribute to thisgoal.Furthermore, in the long run the revenues of PFR without intra-budget transfers maydecrease slightly relative to GDP. This can be explained by the small decrease in the labor29Sustainable state of the budget is defined as the level of net debt (gross debt minus sovereign funds) notexceeding 30% of GDP.
It could reach 30% prior to 2050 and remain at this level. See Vlasov (2011a, b). IMFstudies show that in developing countries the effectiveness of fiscal policy as a countercyclical tool is decreasedwith a public debt above 25 percent of GDP (IMF, 2003, IMF, 2008). Reinhart et al. (2003) found that a criticalvalue of public debt for countries with a history of default is 15 percent of GDP. According to the estimates ofthe Russian Ministry of Finance the critical value for the Russian public debt is 30-40 percent of GDP.30In our estimates for the long-run values we use inflation at a level of 4% and a real interest rate equal to 2.5%.For more details of the model see e.g. Van Riet (2010).33remuneration fund (tax base for social contributions) relative to GDP, forecasted by theMinistry of Economic Development as well as by the regressive scale of rates of socialcontributions.
We do not consider an alternative to a higher rate of social contributions 31.Also, we do not assume any improvement in tax administration since this is associated withhigh uncertainty.32 In general, this corresponds to the estimates of the Ministry of Finance.According to the draft of the Budget Forecast of the Russian Federation for the period to2034, the ministry expects a decrease in the income of off-budget funds without intra-budgettransfers for 2018-2034 by approximately 0.2 p.p. of GDP.
Therefore, the change in thedeficit of the PFR as p. p. of GDP and the need in transfer from the federal budget would beroughly defined by the dynamics of PFR spending.Fiscal risks coming from the retirement pension expenditures are estimated under thedifferent assumptions concerning economic growth, demographics and the scope of pensionreforms (Table 1.3).Table 1.3. Socio-economic assumptions of the development of the Russian economyEconomicgrowthDemographiccharacteristicsReform of theretirement ageReplacementcoefficientPensions ofworking retirees1. Economic growth at 3% (since 2020) backed by structural reforms.2. Economic growth at 1.5% under current conditions.1. Median demographic scenario of Rosstat.2.
Low demographic scenario of Rosstat.3. High demographic scenario of Rosstat.1. An increase for the whole population from 2019 by half a year peryear.2. Preservation at the current level.1. Maintenance at the current level of 35%, pension indexation by arate higher than inflation.2.
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