Belarus state saves $500M+ annually by underpaying pensioners every month
Authorities in Belarus promised an average pension to make at least 40% of the average wage but then changed their mind.
As of 1 May 2018, the average pension in Belarus is BYN340.53 ($170) and the average way in May 2018 was BYN943.90 ($472). An "average" pensioner receives slightly more than one third of what an "average" worker is paid.
National security issue
Didn't the Belarusian government promise to keep the average pension at the level of at least 40% of the average wage? It did, indeed back in 2014! The General Agreement between the Government of the Republic of Belarus, the national associations of employers and trade unions for 2014-2015 reads:
"It reaffirms the task of ensuring the average pension at the level of not less than 40% of the average wage of workers."
In March 2016, the then Minister of Labor and Social Security Maryiana Shchotkina confirmed the government's intention to keep the average pension at least at the level of 40% of the average wage. According to Shchotkina, in 2001 the pension- to-wage share was 45% but in 2015 it went down to 41.7%.
"Our national security vision does not allow the everage pension to drop lower than 40%. Ideally, it should be going up," said the minister.
If the government kept its promise today, the average pension would have amounted to at least BYN377.56 against the current BYN340.53 effective from 1 May 2018.
Where is the difference (BYN37.3)?
The General Agreement between the government, employers and trade unions is renewed once for two-three years. The clause that deals with pensions in the agreement for 2016-2018 contains wording that was... slightly edited. It reads:
"Measures should be taken aiming to ensure the average pension-to-average wage share up to the level of not less than 40%".
Do you feel the difference between "to ensure" and to take measures aiming to ensure"? But Belarusian pensioners do! This difference is equal to BYN37.3 ($18.5), which the state underpays to an "average" pensioner every month.
How does just one word missing allows the state to save on pensioners?
By early 2018, there were 2 377 364 people older that the working age. This number approximately matches the number of those receiving a retirement payment. On average, each pensioner gets BYN340.53 ($170) per month. If the state did not change the wording in the General Agreement, they would have been getting BYN377.56 ($189).
The maths is simple. Every month, the state saves on pensioners BYN88 million - or BYN1.056.000.000 (over $500 million) annually!