Lower insurance a step backwards for pension insurance system - Kudrin
MOSCOW. April 6 (Interfax) - Lowering insurance contributions by businesses would be a step backwards in the development of the pension insurance system, Deputy Prime Minister Alexei Kudrin, who is also the country's finance minister, said in the State Duma.
Raising the insurance rate to 34% was "a significant step forward in the evolution of the pension insurance system, but now we're making a small step backwards towards the unfunded system," he said.
By raising the insurance contribution, the government was taking the size of the future pension for those on low wages into consideration. Companies with employees on a basic 30,000 rubles a month will find it hard to pay that.
"Now, when businessmen are telling us that it is hard to pay so much for an employee and provide for his or her pension we are looking at a deterioration in future pension entitlements," Kudrin said.
So raising insurance to 34% could "not be regarded as a big mistake," he said.
Public sector workers do not tend to receive as much as 30,000 rubles a month and do not therefore exceed the 463,000 rubles a year average at which the 34% is deductible. If insurance contributions are lowered to 26%, then Russia's regions will be paying less, not more, towards pension entitlements for public sector workers.