Transcript:
Maxim Topilin: Colleagues, we have considered drafts of the key parameters of the Pension Fund and Social Insurance Fund budgets for 2014-2016. Pension Fund revenues are expected at the level of 6.8, 7.4, and 8.2 trillion roubles in 2014, 2015 and 2016, respectively, which means increases of 6.5%, 9.3% and 10.8%. How are the revenues shaping up? The key point is that we are not planning to increase insurance premium rates or contributions to public pension funds. They will be at the level envisaged by the relevant laws.
Some insurance benefits have been preserved that will run out under the law. The important thing is that the Pension Fund budget will be formed taking into account the fact that starting from 2014 the contributors who have chosen the pay-as-you-go pension scheme (you may remember – 4% and 2%)… The budget will be formed under new circumstances: for those who choose the pay-as-you-go pension scheme, 4% will be contributed starting January 1, 2014, and only 2% will remain in the defined contribution system. Revenues are based on these parameters. They are transfers, of course. As is known, there are shortfalls in income in connection with the benefits I’ve mentioned, insurance premium benefits. There are Pension Fund carry-overs amounting to 130, 167 and 18 billion for the aforementioned years, which cover the Pension Fund deficit. And there are inter-budget transfers, which we are finalising with the Ministry of Finance. So far we have differences with the Ministry of Finance on this score, but we will remove them during the next month.
How will the pensions fare? We will increase the pensions like we have done in the past. Under the current legislation, we plan for two increases in 2014: on February 1 and April 1, by 5.5% and 3.3% respectively, or 9% in all. Naturally, this is higher than inflation, which means that real pensions will increase. We calculate the average amount of retirement pension at the level of 11,144 roubles in 2014 and over 13,200 in 2016, with a steady upward trend to continue in the years ahead. By 2014, social pensions are to increase by 15.2%. This adjustment is due to this year’s increase in the subsistence pension rate following the adoption last year of a new consumer basket.
As for the Social Insurance Fund, we’ve managed to balance it for the years to come. Instead of covering the deficit with transfers from federal coffers (as you probably remember, this has been the case in all previous years), 2014, 2015 and 2016 will see the Social Insurance Fund’s deficit covered by budget remainders. We would want this trend to continue, so we’ll carry on with our efforts to make the fund less dependent on the federal budget. In the years ahead, we’ll be financing the deficit with a year-end budget balance. This is a new kind of scheme that we’ll employ.
Welfare benefits will be increased by 5% to adjust for inflation which will be included in the budget in 2014.
Consequently, we’ll have a budget surplus in the work-related accident insurance segment. In 2016, it’s expected to reach nearly 17 billion roubles. This trend is also a positive one. We suggest that additional amendments should be drafted as part of the work on a new draft budget, to streamline laws related to work-related accidents, and that compensation rates for the loss of life as a result of such accidents should be dramatically increased. As of now, the compensation rate is 80,000 roubles, an amount financed with surplus insurance. This sum is inadequate, and we suggest raising it to one million. We believe this to be an expedient measure. Also, employers should contribute more money for measures to improve worker safety. Here, too, the rates are to be raised. We’ll be working toward that objective, as well. Thank you.
Question: I’ve got a specific question concerning the one million rouble compensation for accidents. If the compensation rate is to rise, does it mean that employers will be charging more?
Maxim Topilin: Charging what?
Remark: As premiums, I mean.
Maxim Topilin: I haven’t said a word about plans to increase work-related accident insurance premiums paid to the Social Insurance Fund, have I? No, the premiums will not be raised. What I said was that this type of insurance yields a surplus, something that enables us to increase spending.
Question: What decision was made on the budget ultimately?
Maxim Topilin: This isn’t a budget so far, just its main specifications. These have been approved in principle, and we’ll continue to work on all issues remaining to be addressed by the appropriate government agencies and ministries. We’ll need to restrain their appetites by adjusting outlays to the economic realities. But work is currently underway to get the draft budget on the table.
The Finance Ministry is expected to set upper limits on the 11th [of July], and we’ll then be working within those limits (work will continue through the 9th of August, I think). But some disagreements between ministries will remain nonetheless. Implementing presidential executive orders should be the priority, of course.
Earlier today we discussed implemented orders related to public-sector wages. I know my ministry’s budget, and I also know that in it, we can always dig up some additional funds if necessary. We should just try to be thrifty. There are situations where no additional funds can be found, of course. But one of the things we propose to the Finance Ministry is expanding employment programmes for job seekers with special needs. Currently we just subsidise the creation of jobs for disabled workers. But for such people to be able to get decent jobs, we need to provide them with support and on-the-job training as well. We can also offer co-financing for the regions next year under programmes aimed at providing career training for women on maternity leave. This, too, is in line with presidential orders. We could find necessary funds in the ministerial coffers and we propose that the Finance Ministry should do just that. We’re talking about an outlay of 1.5-2 billion roubles per year, which seems to be a moderate sum. We’ll be able to find that much money in the ministry. But we won’t be able to cover all expenses. For instance, we’re in no position to cover the costs of rehabilitation equipment. There’s a great deal of details involved here, and we’ll continue working on them. It’s clear that we should keep going rather than stand still.
Question: The Finance Ministry proposes that when drafting a budget, some spending should be reduced at the expense of working pensioners. The presentation suggests that starting in 2015, the base pension for working pensioners will be scrapped while the occupational pension for all those entitled will stop being adjusted to the rising inflation rate. Does the Labour Ministry approve of that idea? It implies that all working pensioners will be paid less, actually…
Maxim Topilin: No, the Labour Ministry is vehemently opposed to the idea. We are the architects of the new pension reform, but we haven’t come up with any such initiatives. We do not believe that, given current pension and salary levels, it would be possible to stop paying pensions to working pensioners. We suggest another option. Under our concept, a person who puts off pension payments and does not receive them for a certain number of years obtains a certain multiplier effect after retirement. For instance, pensions are set to grow by 50% in five years. But this does not mean that pensioners will not receive fixed basic pensions, as suggested by the Ministry of Finance.
As for indexation, we have agreed that we will slightly adjust the indexation mechanism. The basic pension segment, which is part of the pension-insurance sum, will be indexed in line with inflation levels, and the remaining pension-insurance sum will be indexed in accordance with inflation levels and Pension Fund revenues, just like is happening today. These parameters are currently being adjusted, but, on the other hand, we suggest introducing work-record coefficients and points starting in 2015. The Prime Minister has also supported this. Men and women with longer work records, of 30-35 years, can receive pensions over a ten-year period and it can be done not only for those who are currently applying for pensions but also for those who are already retired. This will make it possible to raise the pensions for those who are already retired. We have coordinated almost all parametres, except some details. We are currently coordinating this draft law.
Question: May I ask you about one more detail? Will the pension-accumulation plan stipulate 2% or 6% rates?
Maxim Topilin: It will stipulate the rates envisaged by the law.
Question: Six?
Maxim Topilin: The law now stipulates 2%, starting in 2014. Current legislation, which was passed in 2012, stipulates 2% rates starting in 2014.
Question: But the Ministry of Finance suggests 6%.
Maxim Topilin: When I answered the first question, I told you that Pension Fund parametres stipulated the provisions of the current legislation, or 2%, as of 2014. Consequently, you can choose four to two. If you have chosen a private pension fund, then you don’t have to write anything else, starting January 1, 2014. You should make this choice in 2013. The way you make this choice is as follows. If you have chosen a private pension fund, then you have opted for a pension-accumulation plan through this fund, and you don’t have to write anything. You will have to deduct 6% into the pension fund. If you prefer to keep silent and do not write anything, then you will have to deduct 4% into the pension-distribution system and 2% into the pension-accumulation system. The entire system precludes any abrupt moves and extra paperwork. If I have opted for a private pension fund, and if I want to deduct 4% into the solidary system, then I will have to write an application. This is the only case, and this is stipulated as of 2014.
But we have now drafted a law, which extends this deadline until 2014 and beyond for those who will come to work and sign work contracts, for young people. We have already coordinated this draft law with the Ministry of Economic Development. But we have failed to coordinate it with the Ministry of Finance, because this Ministry was under the impression that specific rates would be extended, but there is no provision for this.
Question: Earlier this week, the Trilateral Commission on the Regulation of Social and Labour Relations approved a draft law from the Ministry of Labour and Social Protection on limiting bonuses, severance payments and “golden parachutes” for top executives of state corporations and state companies…
Maxim Topilin: There are eight companies there. We have eight companies, to be more exact.
Question: Yes, and your bill also includes companies with state stakes of 50% and more…
Maxim Topilin: And not only top executives but also their deputies, chief accountants and members of managing companies.
Question: Yes, and why did this happen?
Maxim Topilin: You see, ministries and departments, including the Ministry of Finance and the Ministry of Economic Development, as well as employers and trade unions, deemed it appropriate to stipulate broader Labour Code restrictions during the dismissal of employees. The amount in question will total three to six months worth of salaries. We have also discussed this issue. We have submitted this proposal to the Presidential Executive Office. And, if the Presidential Executive Office (because this is a presidential instruction)decides that we are moving in the right direction, then we will issue the law in this form…
Question: This means that this proposal to expand the list of persons who… this proposal has not been coordinated with the Presidential Executive Office…
Maxim Topilin: The Government has been instructed to draft proposals on the draft law. We have submitted these proposals to the Presidential Executive Office.
Question: They are somewhat broader than that was meant by presidential instructions.
Maxim Topilin: I am telling you once again that we have submitted these proposals to the Presidential Executive Office. Yes, they are somewhat broader, but there are also three parliamentary draft laws, which are even tougher.
Question: The other day, the Head of the Federal Migration Service has proposed changing the current foreign-workforce quota-allocation procedure. What do you think about this proposal?
Maxim Topilin: We conduct permanent dialogue with the Federal Migration Service on this issue. What are we doing? As I see it, we are acting consistently. First, we have amended pension-insurance legislation, and we have introduced insurance-premium rates for foreigners as regards the Pension Fund. This was done last year. To date, we have drafted two laws, which stipulate temporary disability insurance for foreign citizens. Right now, foreign workers are much cheaper in Russia because they are virtually not covered by insurance premiums. This draft law is currently being coordinated with employers and trade unions.
Third, we have already submitted a draft law to the Ministry of Justice for coordination, which stipulates voluntary, rather than mandatory, medical insurance for foreigners. The Government will determine specific regulations, including insurance premiums and insurance coverage. This is similar to mandatory medical insurance, although it stipulates a slightly different method. We will therefore even out workforce prices.
Question: Do we need any quotas?
Maxim Topilin: As for quotas and the abolition of quotas, we emphatically oppose such proposals. We consider them to be absolutely incorrect and economically unjustified. There is a multitude of problems. A law authorising us to specify the so-called 783rd Resolution has already been signed. We have not yet received this resolution, which deals with the quota-formulation procedure. We are currently drafting these changes together with the Ministry of Economic Development and the Federal Migration Service. The relevant changes will improve quota-formulation procedures to a certain extent. But we emphatically oppose the abolition of quotas, because this would simply wreck the Russian labour market. We have no regulations governing the issue of patents, which was a good idea. Do you remember how patents for the employees of private individuals were suggested? Do you remember how it took a long time to conceive and assess this idea? Indeed, this idea aimed to legalise the workforce. But what results did it produce? Ask regional leaders in the North Caucasus. It turns out that most workers are employed by private individuals, and that they provide services to these individuals. But the relevant quotas do not list any workers. However, there are very many patent holders, despite the absence of quotas. This issue is not regulated, and no quotas are available. We are thinking of introducing quotas in this area. This situation has to be regulated somehow. Therefore we believe that this is incorrect, and it is our opinion that there is a certain division of authority. In my opinion, it would be necessary to more actively monitor the legal and illegal status of people in the Russian Federation. We would accomplish everything, if we were to address this issue. As I see it, the national situation would improve considerably, if everyone were to start taking care of his or her own business.
Question: You noted at a meeting with Mr Isayev (Andrei Isayev, Chairman of the State Duma Committee on Labour, Social Policy and Veterans’ Affairs) that a road map on raising the minimum statutory monthly pay will be drafted by July 1. Is this road map available, and how is it linked with this draft budget?
Maxim Topilin: It is not linked with the draft budget in any way. It has not yet been coordinated because it can be implemented only by resolving the issue of district regulation of salaries. You are familiar with this subject, right?When there are contradictions in the labour legislation, we still try to resolve this issue in a definitive way because there are many courts. We feel very uncomfortable in this situation but we realise that since the minimum wage is linked to the living wage, the issue cannot be solved without zonal regulation because the living wage always includes the minimum wage and it also always includes regional differentials. If we take the average living wage for the Russian Federation, the average regional differential and average hardship pay bonuses are part and parcel of it. They are included in the minimum wage under one article of the labour legislation; but there are other articles which say they are not. These are internal contradictions, unfortunately, this was done some time ago. Many experts said at the time that these legislative amendments were wrong but we have what we have.
So I believe we will continue our talks, meaning that by 2018 … We are setting ourselves the aim of bringing the minimum wage to the level of the living wage by 2018. The trade unions, of course, want this done sooner, while the employers a bit later. But we are setting this goal. I can say that the work will go on at least until 1 January next year. Thank you.
