There are about 60 pensioners per every 100 workers in Belarus. One quarter of the population, i.e. around 2.5 million constitutes elderly people. The nation is ageing: the number of pensioners is increasing year by year.

Belarus has adopted a distributive pension system, when pensions are paid out from a so-called Pension Fund, which accumulates resources paid by workers via taxation of their salaries. The pension system bears equalizing nature, which is a result of the state policy. An economist, ex-Minister of Labour, Mr. Aleksandr Sosnov believes that “our pension system is not just. Pensions would have been different and the difference would have been significant if the amount of a pension depended on the years of work and on the amount of salary”.

Only 1.5 % of pensioners are satisfied with their pensions

The average pension amount in June 2008 constituted 349 thousand Belarusian rubles (i.e. 122% of the minimal consumer budget). The amount of the pension by age is 366 thousand Br and social pension constitutes 138 thousand Br. The actual amount of pension, adjusted by the consumer prices for goods and services index decreased by 1 % compared with April 2008.

Pension level is assessed as satisfactory when its wishful and factual amounts coincide. The results of a social poll, conducted by the Institute of Entrepreneurship and Management, show that the majority of Belarusians (70%) consider their pension as low or rather low. This group most frequently includes people with higher income and education levels as well as employees of non-state enterprises. About one-third (28%) believes that their pension is average and allows for buying everything they need. Only insignificant part of Belarusians (1.5%) considers its pension as rather high.

A. Lukashenko, “Pensioners are the most considerate part of the society and a basis for stability in the county”

Once the Belarusian President Aleksandr Lukashenko called pensioners “the most considerate part of the society and a basis for stability in the country”. “Unlike in other neighbouring countries, Belarusian pensioners do not have huge pretensions towards the authorities, they realize that the state is going through a difficult period”, explained Lukashenko. Until recently the authorities knew that pensioners being a basis for stability in the country should be supported. Pensioners had a right for 50% discount for using public and inside-country transport, elderly over 70 years old could purchase drugs with a 50 % discount, and separate categories of pensioners had benefits when paying their utilities bill. However, the state started abolishing these benefits gradually.

Abolished benefits

In 2003 the Council of Ministers abolished a number of benefits for pensioners which had achievements vis-à-vis Belarus. First of all it concerned people who where awarded with titles “people’s” and “merited”. They were deprived of 50% discount for utility and housing bills, annual free sanatorium and recuperation treatments, free use of public transport, as well as free of charge dental services. The regulation of the Council of Ministers was adopted in order to “rearrange social benefits”.

Since 17 December 2007 the law on “State social benefits and rights and guarantees for certain groups of citizens” entered into legal force, which de facto abolished all benefits for the majority of the pensioners. The most significant of all was the abolishment of the 50% discount for using public and inside-country transport for pensioners, and the abolishment of the 50% discount for drugs for those who are over 70 years old. It is not a secret that at that age a significant part of pension is spent on drugs.

“We shall not have social tensions in this regard. It is true that the President is relying on pensioners and elderly people’s support”, stated the President Lukashenko. He also said he was convinced that regardless of pensioners being upset with him for abolishment of benefits, “they never betrayed me and never will”. The Head of the state stressed that “it should not be acceptable to become pensioners in the middle ages and to receive benefits at the same time”.

The expenditure for targeted assistance is three times less than savings on benefits

There was a promise to introduce targeted assistance to replace the previously existing benefits. Aleksandr Lukashenko signed an Edict No 638 on 14 December 2007 “On certain measures of the state support to the population”. Now those whose income per person in a family is lower than the minimal living budget (now it constitutes 210 thousand Belarusian rubles) may rely on the targeted assistance from the state. In the past 6 months of 2008 191 thousand people received the sate targeted social support. The overall amount of pay outs constituted 31.6 million Belarusian rubles. For comparison, the Ministry of Finances calculated that the abolishment of the existed benefits would allow releasing around 160 billion Belarusian rubles which would then be rearranged according to the addressed needs. However the amount allocated for addressed support in the 2008 state budget constituted 60 billion Belarusian rubles only.

Belarusian pensioners are usually hard working

A significant part of Belarusian pensioners, i.e. over 600 thousand, continue working. This year the number of working pensioners increased by 4% compared with the previous year. It is impressive that among working pensioners there are 566 males and 782 females over 80 year old. 20 thousand females and 24 males aged between 70 and 79 still work. One of them is a professor of the Linguistic University, Alla Sokolovskaya, “My pension is 380 thousand rubles. I pay over 200 thousand rubles for housing and utilities. I have no idea what I will do if my work contracts expire. I am terrified. I own a huge apartment however that is the only thing I have. I find myself in a complicated situation but it is good that I have a job. I worked as the Head of a Department for many years. I used to have a very high salary, similar to a salary of a director of a factory. I have been working for 50 years. Now the amount of my pension is the same as pension of those who have been working for 20 years only. Therefore I have to work”.

The “hard work” of Belarusian pensioners as well as economic values make the authorities consider increasing the retirement age. An Economist Aleksandr Kovalev expressed an opinion that “the average male life expectation age in Belarus is lower than the retirement age. Why do we make contributions to the pension fund? There is no urgent need to increase the retirement age. However in Belarus it is lower than in other European countries, let alone the United States. The retirement age will be increasing in the future. However we should shift from the compulsory contributions to the state system of social support and towards the system of private pension contributions, and create retirement savings funds”.

Why there are no retirement savings funds in Belarus?

All civilized countries, including Russia, have so-called retirement savings funds. Why there are no such funds in Belarus? An Economist Mikhail Zaleski thinks there are no economic preconditions for that: there is no stable currency and stable economy. “Here everything is organized vertically, there is no horizontal organisaiton. The economy is bureaucratic on principle. Therefore no one believes that if, for instance, they bring their savings into a bank within twenty years they will be able to receive retirement money. The fact that people do not make retirement savings contributions is a crucial economic indicator for rating the economy. There are no real pension funds that a significant part of the society could trust”, says Mr. Zaleski.

An etalon for evaluation of the satisfactory living conditions for Belarusian pensioners is not an abstract ideal, but an example of a Western pensioner, who is capable to satisfy his or her needs at a high level, has an active lifestyle and travels around. However even younger generation is not certain that similar conditions could become a reality in Belarus in the future.

Ludmila Korsak