Russia Works to Strengthen Pension System

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Under the communist regime in the Soviet Union, the elderly could count on getting their pensions. When the Soviet system collapsed, many of Russia's elderly were left in poverty. Now, President Vladimir Putin is making changes to the pension system.

STEVE INSKEEP, host:

Here's one more reason that many Russians remember the Soviet Union more fondly than we might expect. For all of the oppression of those times, Russians could count on at least one thing - as well as other people of the Soviet Union - the state would fully provide for retirement.

That support all but vanished with the communist collapse nearly 15 years ago, and many elderly were left to fend for themselves. NPR's Gregory Feifer reports on how Russia's pensioners have fared since then.

GREGORY FEIFER reporting:

You see them on the street and in under passes, elderly Russians, hunched over, sometimes kneeling, holding out their hands. Most cross themselves profusely when a passerby deposits some coins.

Seventy-one-year-old Alla Anyskena(ph) once worked in a factory in the Volga River city of Nyznenovgrad(ph). She says her pension is about $75 a month, which leaves her no choice but to travel to the capital to beg.

Ms. ALLA ANYSKENA: (Through translator) It's difficult, very difficult to survive. But what else can I do? I have a temperature, but I sit here on my knees. I have bad eyes, and you need money to treat them.

FEIFER: Many elderly improvise. Seventy-two-year-old Moskovite, Ledia Kusnytzova(ph), a former engineer in the defense industry, adds to her $130 pension by selling clothes she makes herself. She also grows her own vegetables, which she pickles for winter. Kusnytzova says she preferred life under the Soviet Union.

Ms. LEDIA KUSNYTZOVA: (Through translator) Because we grew up under that system, what's happening now is if pensions are raised even a little, prices for everything rise again.

FEIFER: It's all a stark contrast to the conspicuous display of wealth on central Moscow's traffic-jammed streets, where Bentleys and BMWs line up in front of expensive restaurants and exclusive nightclubs. High oil prices have made some Russians very, very rich.

In his State of the Nation Address this month, President Vladimir Putin acknowledged the discrepancy, saying Russia owes the elderly a debt.

President VLADIMIR PUTIN: (Through translator) These are people who gave their whole lives to the country, working for it, and when necessary, standing up to defend it. We have to do everything possible to give them a worthy life.

FEIFER: The government carried out comprehensive pension reform in 2002, indexing payments to inflation. Olga Sinyaskay(ph), of Moscow's Independent Institute for Social Policy, says that was a real improvement over the chaos in the years that followed the collapse of communism.

Ms. OLGA SINYASKAY (Independent Institute for Social Policy, Moscow): (Through translator) In the 1990s, elderly people on pensions in large cities were especially isolated and vulnerable. But now the situation has changed.

FEIFER: Even though the average pension has doubled since 2002, Sinyaskay says it's barely above the official subsistence level. She says, while Putin has ordered an increase in pensions, nothing's been done to fund it.

Ms. SINYASKAY: (Through translator) The president has ordered payments be raised significantly by 2008, but there's no money in the pension fund. Rates are being raised faster than was planned in the 2002 reform.

FEIFER: For future pensioners, the government is creating a Western-style system, and encouraging private retirement accounts. Already, a new scheme for current workers resembles the U.S. Social Security system.

Most of the elderly will survive for now, thanks to Putin's pension increases. But Olga Sinyaskay says unless the funding problem is sorted out, a sudden fall in oil prices or another financial jolt may leave the government unable to maintain even today's relatively small payments.

Gregory Feifer, NPR News, Moscow.

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