Pensioners

The official retirement age for women is 55, and for men, 60. Around one fifth of Belarus’ 2.5 million pensioners officially continue to work. There is little connection between the size of individual contributions and the size of monthly pensions.

This one-tier pay-as-you-go system pays pensioners on a monthly basis, distributing contributions collected in the Social Security Fund (SSF), paid by employers and making up to 29% of an employee’s salary. Until recently, there were 57 retirees per 100 workers. A positive effect of this system is a favourable proportion between pensions and wages (according to experts, recently the median pension was even slightly higher than the median wage). The downside is its unpredictability (the amount of the  pension depends entirely on the formula of its calculation and availability of funds in the Social Security Fund), for example, the real incomes of pensioners “sunk” by more than 16% as a result of the 2011 economic crisis.

Studies show that the 2011 economic crisis most affected people with the highest or lowest incomes. Devaluation of the Belarusian rouble meant that individuals with a high income lost a large amount of their savings in this currency (as many found it more profitable to keep savings in BLR rather than USD). The poorest struggled despite measures by the government to increase the minimum wage (BYR 1 million or approximately USD 120, which is impossible to subsist on), and despite the tight price control over basic food stuffs and fuel.

According to the World Bank, the number of retirees per 100 workers is set to double by 2033 (not taking into account a possible increase in emigration). The need to reform the pension system seems obvious. While the government is not ready for radical reforms in this area (nor in others), it has recently taken a few cautious steps to encourage later voluntary retirement.