Money for Old Age

Belarus plans not only to reform its pension system, but also to encourage an increase in birth-rate
Over the past five years salaries and pensions rose fivefold in Belarus, to the equivalent of $255 [$227 in the public sector] and $102, respectively. This is enough for working citizens to fill two and a quarter minimum consumer goods baskets and for pensioners to have one. In terms of its salary level Belarus ranks third in the CIS after Russia and Kazakhstan, but as for social security of pensioners, Belarus is second to none. In January 2006, the working pension averaged $110 in Belarus, $97 in Russia, $70 in Kazakhstan and only $40 in Ukraine. Five years ago well-to-do Belarusian were getting 6.7 times more than lower-income citizens on the average. The figure stands at 3.8 times now.

The UN places Belarus among nations with ageing population. Citizens older than 65 account for 14% of Belarus’ total population [20% in cities and around 35% in the countryside]. Labor Minister Antonina Morova said 579 billion Belarusian rubles were spent on pensions every month. “We charge those who still work and distribute the money among pensioners. This is the solidary system of retirement insurance. In the accumulative system that may be introduced in 2007 or 2008, pensions will depend on insurance premiums and time of payment,” the minister said. In other words, it will be necessary to take care of your old-age pensions since young age. The later you retire, the higher insurance premiums you pay, the more comfortable your retirement will be.

The first phase of the reform will start in mid-2007. The Labor and Social Security Ministry plans to reduce the burden on the pension system by excluding early pension liabilities. There are some 500,000 Belarusians that enjoy early pensions for working in harmful labor conditions. The ministry will elaborate quotients ranging from 1.5% to 2.5% for companies and organizations that allow people to retire five to ten years earlier that usual.

These transfers will form a special fund to pay the so-called “professional” pensions and reduce social insurance premiums, Antonina Morova said. These premiums account for 29% of the salary fund and 1% of all personal salaries.

Belarus plans not only to reform its pension system, but also to encourage an increase in birth-rate. Lump-sum allowances for women that gave birth to a third child have been raised to three living wage budgets.

Tatiana Timovich
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