New reform links contributions to pensions

Belarus is also facing problems with an aging population. As the ratio of pensioners per 100 workers rose from 46 in 1990 to 60 in 2005' Belarus has to review its pensions scheme. Mandatory and voluntary insurance' additional insurance for those who work in dangerous conditions and targeted pensions payment for early retirement: these are a few of the measures announced by Valentina Koroleva' head of pensions provision at the Labour Ministry.

Belarus new pensions reform tackles one fundamental issue. How can one prevent a pensions crisis without increasing insurance rates? Belarus'insurance rates' currently set at 29% are among the highest in the world. Yet the ratio of pensioners per 100 workers rose from 46 in 1990 to 60 in 2005.

The state needs to find new sources of income to finance pensions. Presently poor earners receive pensions equal to 60 to 80% of their previous income. But those who pay large pensions fees only receive 15 to 20% of what they used to earn. The state will therefore introduce mandatory and voluntary insurance with accumulative pensions schemes. This means that pensions will not be redistributed as they used to. The payment of pensions will now be based on the workers insurance fees.

The Labour ministry also wants to introduce a special insurance fee for employers who have workplaces in harmful condition. Indeed early retirements are given to retirees who work in difficult conditions. Since 1990 the number of workers taking early retirements has tripled to 24% of all retirees. The Labour ministry plans to make employers pay lump sums to fund these early retirements.

(Prime-Tass' 05/31/06 : "New pensions scheme must include voluntary insurance and cumulative schemes")