Prokhorov proposes own option for pension reform

The billionaire leader of the Civil Platform party, Mikhail Prokhorov criticized proposals to reform Russia's pension system and is proposing his own option for accumulating pension savings for future retirees that he said would become a "compromise for market advocates and advocates of conservative approaches."

"For all those who earn up to half a million rubles per year, the whole amount of insurance contributions should be paid into forming the pay-as-you-go portion of pensions, not the funded portion. Calculations show that in this case the pension of such a worker will at worst grow by about 20% faster than with the current system," Prokhorov wrote on his Livejournal blog on Wednesday.

However, Prokhorov said all the funded pension savings accumulated in previous years should be left under the management of pension funds.

"Everyone who earns upwards of half a million per year should be given the right, with their approval, to direct the 10% collected from their salaries to their pension savings account. This refers to people with a monthly income above 40,000 rubles. In other words, the middle class, which is the foundation and backbone of all prosperous nations today. In Russia there are also already quite a few [such people] - almost 30% of workers," Prokhorov said.

He said that under such a pension system "people will strive to work more and better, increase their education level and professionalism. This is real social justice, and not the equality in poverty to which people are condemned by the current system."

Pension reform in the form that is currently being proposed will not resolve "the main contradiction that is imbedded in current legislation - the dependence of the size of pensions on the productivity and results of the labor of future pensioners," Prokhorov said.

"Today a highly qualified professional receives almost the same pension as a worker with far lower qualifications, and sometimes even less. I believe this is a serious problem that is holding back the development of our country, the modernization of its economy," Prokhorov said.

"Trying to plug the hole in the budget of the pension fund, officials want to virtually return to an equalitarian social security system, in which no one has an interest," Prokhorov said.

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