LDN - Business

Putin dilutes pension reform that has hit his popularity

[August 29, 2018] By Andrew Osborn and Andrey Ostroukh

MOSCOW (Reuters) - President Vladimir Putin diluted draft legislation to reform the pension system which has knocked his popularity and stirred protests, but said on Wednesday that Russia's shrinking workforce meant reform was inevitable and would still hurt.

In a TV address, Putin, who once promised to never raise the retirement age, for the first time took responsibility for the reform which he said was needed to protect state finances, ensure social stability and safeguard national security.

But while putting his name to changes which have sent his popularity ratings to four-year lows, he said he was softening parts of the reform, including cutting the proposed retirement age for women by three years to 60.

"The demographic development and labor market trends and an objective analysis of the situation show that we can't put this off any longer," said Putin. "But our decisions must be fair, balanced and absolutely take into account people's interests.

"That's why I am proposing a raft of measures that will allow us to soften the decisions taken as much as possible."

The retirement age proposal is politically sensitive for Putin, who was re-elected in March, because it has prompted protests across Russia since it was announced on June 14, the day Russia played the first match of its soccer World Cup.

Putin's own approval rating has fallen to 67 from 80 percent earlier this year, according to the Levada Centre pollster, its lowest since before Russia's 2014 annexation of Crimea.

Opinion polls also show that around 90 percent of the population oppose the government's original proposals, which envisaged raising the retirement age to 65 from 60 for men and to 63 from 55 for women.

Putin said on Wednesday that women should retire at 60 not 63. "We have a special, caring attitude to women in our country," he said.

'THREAT TO STABILITY'

It was not immediately clear if Putin's intervention would be enough to defuse public anger, but state television, where most Russians still get their news, presented his intervention in a positive light, as did politicians from the ruling United Russia party.

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Russian President Vladimir Putin addresses the nation on pension reforms in Moscow, Russia August 29, 2018. Sputnik/Alexei Druzhinin/Kremlin via REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY.

Raising the retirement age would allow the government to pay out bigger pensions, whose current size he described as modest. The government says the average monthly pension will be 14,414 roubles ($212) by the end of the year.

Putin said the draft legislation, which is going through the State Duma, the lower house of parliament, would be amended to reflect his own ideas in the near future.

He listed several ways of raising money to fund the current pension system in order to delay reform, but said all of them would only work in the short term. Further out, they would end up destroying the economy, which has been battered by years of Western sanctions.

"In the long term, if we hesitate now, it could threaten stability in society and hence national security," said Putin.

Putin's spokesman has said the Russian leader is unfazed by fluctuations in his popularity but had decided to act on pensions because of the issue's importance.

Putin's political opponents, including opposition leader Alexei Navalny, have tried to tap into public anger over the proposed changes by organizing protests.

A court sentenced Navalny to 30 days in jail on Monday after convicting him of breaking public protest laws, a move he said was illegal and aimed at stopping him leading a rally against pension reform next month.

($1 = 68.0195 roubles)

(Additional reporting by Gabrielle Tétrault-Farber, Katya Golubkova and Tom Balmforth; Writing by Andrew Osborn; Editing by David Holmes)

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