Russia's Finance Ministry announced that starting January 1, 2025, pensions will be indexed for both working and non-working pensioners, marking a significant policy shift after years of suspension due to budget constraints. The increase will be aligned with the inflation rate, projected at 7.3% for the end of 2024, raising average old-age insurance pensions to approximately 24,000 rubles. This initiative aims to support over 7.8 million pensioners and is expected to cost the budget 96.45 billion rubles in 2025, with escalating costs in subsequent years. President Vladimir Putin emphasized the need for this indexation as a fair and necessary measure to address the financial needs of citizens, especially in light of the current low unemployment rate of 2.4% in Russia. Experts believe that this move will encourage many pensioners to remain in the workforce, helping to alleviate labor shortages and stimulate economic growth.
- The decision to resume pension indexation comes after a long hiatus that began in 2016 when the government faced significant budget deficits. The Finance Ministry has assured that despite borrowing to cover the budget gap, public debt levels will remain manageable. Analysts highlight that the indexation will not only benefit pensioners but also enhance their purchasing power, potentially boosting demand for goods and services in the economy. Furthermore, the government is taking steps to ensure that experienced workers, including pensioners, can continue contributing to the labor market, which is crucial for sustained economic development.
