On the Economic Incentives for the Delayed Retirement

Abstract

Objective demographic and socioeconomic tendencies stipulate the increasing number of retirees with respect to employees and employers who pay compulsory pension contributions. This intensifies the financial pressure on the pension system. Since the problem of raising the retirement age has not been solved, the one way to improve the financial stability of the pension system is to incentivise the delayed retirement. The necessity for the development and realisation of a mechanism for additional incentives for the delayed retirement was anticipated in the Strategy for the long-term development of the Russian Pension System (Strategy). With the aim of realisation of the Strategy, there was anticipated additional coefficients for individual pension coefficients. These coefficients are used to calculate the base and insurance parts of the old-age pension. During the development of the Federal law about insurance pensions and appropriate measures to incentivise the delayed retirement, the macroeconomics situation in the Russian Federation was more stable than nowadays. A deterioration in the macroeconomic situation in the Russian Federation, in addition with the growth of the geopolitical instability after 2014, caused an increase in socioeconomic uncertainty and associated risks, including risks of the pension system. As a result, according to the data from the Pension Fund of the Russian Federation between 01.01.16 and 01.06.16, the total number of individuals, who decided to delay their retirement, was about 100 thousand. Therefore, in the new macroeconomic reality it is an actual task to review measures that was developed to incentivise the delayed retirement.