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30-Year-Old Belarusians May Not Get Pensions

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30-Year-Old Belarusians May Not Get Pensions

The PAYG pension system is failing.

October 1 is the International Day of the Elderly in Belarus. But is the Belarusian state able to support its current and future pensioners? Belsat.eu offers to speculate about it.

What do we have?

According to the National Statistics Committee, as of early 2019, 2.09 million people over 60 years old lived in our country. This is more than every fifth resident of Belarus. Over the past ten years, the number of elderly people has increased by 322 thousand people or 18.2%.

Since 2017, the retirement age in Belarus has been constantly rising. As of today, it is 61.5 years for men and 56.5 years for women, while in three years it will reach 63 and 58 years, respectively.

The average size of the retirement pensions is Br446.84. At the same time, the minimum retirement pension is Br 242.88, if a person has worked for 25 (man)

or 20 (woman)

years. Social pension for those who have no such work experience is Br 115.46. At the same time, some pensioners can have additional payments that will increase their pensions.

The last time the pension increased on August 1. By the end of this year, it is planned to reach the ratio of not lower than 40% between the retirement pension and average salary.

One should not rely on the state

What pensions will Belarusians of the current age of 30-35 be able to count on? We asked Maria Akulava, a researcher at BEROC Belarusian Economic Research and Education Center .

According to the interlocutor, the study conducted before the retirement age growth showed that it would not be possible to ensure the sustainability of the current pension system without reforms. Otherwise, the pension age will be increased again up to 65-67 years for men and women to support current pensioners.

Maria Akulava highlighted the importance of qualitative pension system reform. For example, it is necessary to introduce an accumulative element. It is also necessary to reform the system of assistance to the unemployed and women on maternity leave. But "this is a complex and painful process", which also requires a sustainable functioning of the economy.

Therefore, it is necessary to "start making savings from the age of 30".

- Let it be some kind of voluntary insurance or some deposits. Working from the age of 30 till 65 does not guarantee any pension paid by the state," the economist said.

To save 10% of income

The expert believes that there are no risks of savings failure, as it was during the collapse of the USSR. The professionalism of the National Bank has grown significantly now. And those who do not trust the Belarusian banks can turn to foreign ones. It is also possible to use services of international insurance companies, which "have been quite successful in the market for decades". Maria Akulava also offers to invest in corporate bonds of a high roller with a lower ability to fail.

The interlocutor also offers to save at least 10% of monthly income to create a "gradual cushion".

Maria Akulava assumes that in about five years, the Belarusian authorities may launch specific reforms in the social sphere, "as it's getting harder to ignore the issue".

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