mil ^
MEMORANDUM
AN ANALYSIS OF THE MAY6 SOVLKT DRAFT LAW ON PENSIONS
I
CENTRAL INTELLIGENCE AGENCY Office of Research and Reports
CIA/RR36
.n't
CCflTEKTS
I.
II. Economic
III. Analysis of Changes in Benefit
Pensions
a- Present Law
b. Draft
3- Survivors*
'i. Other Provisions of the Draft
Appendixes
Appendix A. Gaps in
Appendix B- Source References
Page
1. Planned Expenditures for Social Insurance and Social Security
In the USSR,
?- Old-Age Pensions Df Workers and Employees Under the6
Draft Law In the
3. Computation of Basic Disability Pensions Under Present Law
in the
Computation of Basle Disability Pensions Under the6
Draft Law in the
5- Minimum and Maximum Disability Pensions Under the6
Draft Law in the
Clh/PR
(ORR Project Ul.lHO)
AM ANALYSIS O' Tilt6 SOVIET DRAFT IJVU ON PENSIONS*
BOHKU
6 the Council of Ministers, USSR,raft 'aw on state pensions which was to become effective6 if approved by the Supreme Soviet. The draft lawajor piece of social legislation,asic revision of the entire pension structurehe first sincen. The law codifies the numerous decrees and regulations governing pensions for workers and employees and integrates veterans' pensions with civilian social Insurance.
Pensions for most eligible workers and employees and theiras well as for veterans and their families, will be substantially increased when the new law takes effect. Because minimum pensions fixed in the new law exceed the maximum pensions available to many workers under present arrangements, the greatest Increases vlll accrue to lower paid wage earners.
The new pension lawinimum old-age pensionubles per monthaximumubles. Under tbe present
pension system, most workers receiveubles.
Accordingoviet source, the average old-age pension will increase by more thanercent and the average disability pension byoercent. Additional budget allocations6 billion rubles annually, an increase ofercent over the total smount budgetedill be required for social insurance and social security under the nev law.
The estimates and conclusions contained In this memorandumthe best Judgment of ORR as
The new law will continue the present Soviet policy of using the pension system as an instrument to further general isuipowcr policies- Special benefits are accorded workers who stay in the same job for long periods, who work in remote locatloos or under
unpleasant working conditions, who are engaged directly in production and who are employed in those Industries considered most important to the state.
I- Introduction.
6 the Council, of Ministers, USSR,raft law on pensions which was to be submitted to the Supreme Soviet forand if approved was to become effective. The proposed lawundamental revision of the pension system, the first sinces. eform was foreshadowed in Khrushchev's statement tn March to the XX Party Congress thatwould be taken shortly to "radically improve the state of pensions" so as to remove "grave
Under present arrangements, pensions paid to eligible citizens are governed by several different systems. All "workers and employees"'" are covered by state sociaL insurancenovehich provides old-age, disability, and survivors' pensions and is financed from contributions of state enterprises. Disabled veterans, members of the families of deceased veterans, and citizens disabled from birth are granted pensions under the system of state social security (sotbinl'noycinanced from general state funds. Specified categories of scientific, educational, and technical workers receive pensions after designated periods of continuousand special "personal" pensions arc awarded to citizensparticularly meritorious servicese state. Some of theue lone-service and personal pensionsart of social insurance, and others come under social security- Officers and other specified personnel of the armed services and the MVD are covered by Special pension systems financed from the budgets of the ministries concerned.
*' Workers and employeesechnical term used bv the Soviet It includes workers in heavy and light industries, in state agriculture, and in nonindustrial services such as transportation, cofM-numc-it1.ons, construction, trade, education, health, and art; it also includes employees of all state and public institutions. The term docs not include workers on collective farms, inOinbers Of theorced laborers, or independent artisans.
Finally, although members of the collective forme are not covered under any of these ayatems, needy kolkhozntki (collective farmers) may be awarded pensions from mutual aid funds provided by fixedfrom koi.kh.oximilar arrangements exist for members of artels.
The new pension low will simplify the pension structureby combiningingle piece ofultiplicity of different decrees and regulations governing old-age, disability, and survivors' pensions for workers, employees, and others. She law also proposes to Integrate the system of disability and survivors' pensions for veterans with the civilian social insurance system. Finally, eligibility rules and the methods of calculating pensions will be made much less complex than they are now. From the point of view of the individual worker, however, the principal advantage of the proposed law is the fact that It will resultubstantial increase in the overage pension. For example, under the present system the old-age pension for most workers is limitedubles, or 2U0 rubles per month (depending on the kind ofhereas under the new provisions tho minimum monthly pension is fixedubles, and the maximum is set. Although most pensions will rise
when the new law takes effect, some may be reduced. According to one reliable report, military officers' pensions hove already been
cut.,
II. Economic Costa.
According to Finance Minister Zverev, the new pension lawthe average disability pension byoercent andold-age pension by more thanercent; the annual costImproved pensions is estimated6 billion
figure represents on Increase ofercent over the total amount allocated for social Insurance and social security In5 budget and an increase ofercent over the amount provided.
In the Soviet budget, funds for the payment of pensions areunder two separate categories, social insurance and social The amounts allocated to these categories in the budgets for the past few years ore shown ln Table 1As would be expected in a
According to availableercent of kolkhoz gross income Is set aside to finance these mutual aid funds. ollows on p. k.
Tabic 1
Planned Expenditures forxial Insurance and Social Security inUSSR
Billion Rubles
ial
k
k
.a.
b/
b/
Including unknown amounts allocated for family allowances.
nationrowing and gradually aging population, the amounts allocated for these social services have been increasing slowly. The substantial increase in the total allocations planned6 undoubtedly represents an allowance for the higher pensions scheduled to be in effect during the last quarter of the year. As indicated by the figures In Tablell of the planned additional funds were allocated to social security, and no Increase was made in social insurance funds, evenubstantial additional amount will be needed to finance increased pensions for workers covered by social insurance as well as for those (mainly veterans and their families) covered by social security. It is possible that all of the estimated Increase in pension costs6 was simply allocated arbitrarily
'IPlfl
to the social security account It is also,am PttswlM if cxpendt'urei fon-^rly classified under social Insurance have been transferred to social securityart of the revision of the pension system.
The budget categories social security and social Insurance include many types of expenditures other than pensions. According to Soviet sources, pensions account for about 'it) percent of the budgetfor social insurance (that is,illion rubles inIf thin 'percentage Is also applicable to social security allocations, the total estimated expenditures for pensions5 would2 billion rubles. Total expenditures of such magnitude would not be inconsistent with data cited by Zverev with respect to estimated costs of the new pension bill. The number of persons receiving pensions is not known but la thought toillion.
The estimated annual allocation of an6 billion rubles to pay for higher pensions provided under the new billa sizable addition to the disposable income of the Soviet This provision of additional purchasing power Is In contrast to the recent Soviet policy of attempting to stabilise consumerolicy that has been largely successful. Nevertheless, theundoubtedly considers this concession not toorice to pay, for the reaction of the populace to the pension announcement has apparently been highly favorable.
Pensions paid out under the social insurance system aremeans of compulsory contributions from enterprises and state Contribution rates are fixedpecified percentagetotal wage fund and vary among industries, depending on theof benefits paid to eligible employees in tho industry. rates range fromercent: enterprises In thefor example,ercent, whereas those in stateund procurementIs estimated that invlll3 blTllon The total yield from this source foroutlays for social Insurance benefits. As yet thereno indication that contribution rates are to be raised Inadoption of the new pension program.
Analysis of Changes lo Benefit Provisions-1- Old-Age Pensions.
a. Present
Under the present system, old-age pensions are paid to workers and employees on the following conditions " (
Those working underground or ln harmful occupations may retire at agefterears of serviceensionf their average wage, limited by appropriate maxima.
Basic cadres* (osnovnyye kadry) in designated(metallurgy, machine building, chemlca's, petroleum, and others) may retire at agerfterrears of service on aofercent of their basic wage or salary.
All other's may retire at agemen) orwomen) afterrears of service, respectively,ension ofrercent of their average wage (depending on theimited by appropriate maxima.
The maxlBw amounts of wages on which pensions areare fixed separately for each industry, varyingubies per month; the former is applicable to mostcost-of-living supplement ofubles per month is paid topensioners who live lo cities nnd whose monthlynotworker need not retire in order to
ension.
'ihe net effect of these provisions Is to fix old-age pen-rioos for most workersnd 2K0 rubles per month nts
; ufficient to purchase, for exar.pLe,5 the lovea^ prlord wit in the principal state
department store In Moscow (GUM)ubles.
The sico p'-rsonncl directly aovaMOtcd v: the production work of the enterprise. term apparently includes all plunt employees except those engaged in Intraplant transport, to leaching or administration of plant schools, in medical-sanitation work. In providing cultural or cocatunal services for workers, in Investigative work, and In experimental and research work.
b. Draft Lav.
Eligibility requirements for old-age pensions In the new lav urc essentially the sane as under Uie present law, except that women working underground or ln unhealthy surroundings may retire at age h5 with l6 years of service. Pensions depend on the kind of work und Ihe average earnings, as shown In Table 2.
Table 2
Old-Age Pensions of Workers and Employees Under the6 Draft Law in the USSR
Peasloos (Percent of Moothly Earnings)
Monthly Earnings (Rubles)
Workers and Employecs Except Those la
5t0
and Employees Who Work Underground or Who Are
Engaged ln Work Conducted Under Unhealthful Conditions and lo Hot Workshops
0 BO0 55
Pensions are increased byercent for those who retire after an uninterrupted period of overears and for thosee.ieodent; thoser more dependents receive an additionalercent. The minimum monthly pensionubles and theubles. In contrast with present practice, the new law discriminates
7
pensioners woo continue to work after they are eligible for pensions. Those whose monthly earningsubles receive no pension If they continue to work; if their earningsubles or less, their pensionubles, except that those engaged In underground or unhealthful work receiveercent of the pension to which they would be otherwise entitled.
f
The net effect of the new provisions will be to Increase substantially the old-age pensions of the great majority of workers and employees. To illustrate: under the presentextile worker who meets the eligibility requirements and whose qualifying wage averages TOO rubles per month is entitledonthly pensionubles, whereas under the draft law he would be entitledubles, and If heontinuous work period of more thanears he wouldubles. The fact that the new lawn the faceightening labor supplyenalizes those who continue to work may Indicate that older workers, particularly In tbe lower wage categories, hove been found to be relatively unproductive andunable to cope with new mechanized processes being widelythroughout Soviet industry. -
2. Dloubillty Pensions, a. Present Lav.
Long-term disability pensions*he pensions treated in this memorandumare paid to eligible workers and employees, the amounts depending on the cause and extent of the disability and on the age, sex, kind of work, and length of service of the worker. Those disabled by accidents or disease connected with their work are eligible for pensions (workmen's coapensatioa) regardless of age or length of service. Those disabled from other causes are ellgi ble for pensions only if they have worked the required number of years (rangingoears dependingx. and kind of Eligible disabled workers are classified in threeon the banln of the degree of disability as found by medical
Persons whose disabilities are regarded as curable arc not paid pensions under social insurance, but may receive sickness benefits under another program.
** One year of work In tbe extreme north and in other remote areas Is countedears in determining service eligibility for both dInability and old-age penstona.
commissions, and basic monthly pensions are then computed an shown in TableVarious kinds of supplements to these basic pensions are provided as follows:
An additionalubles per month is paid to nonwork-Ing pensioners living in cities.
For continuous service in the sane enterprise orthe basic pensionork-connected disability Is Increased byoercent, depending on the number of years of service and kind of work. For example, most workers withears of service axe entitledpercent increase; miners working undergroundpercent increase.
Disabled veterans (other than officers) who workedprior to military service arc paid disability pensionssame basis as civilian workers, except that the maximumfixed at UCC rubles perwho did not work
prior to military service receive Iixed disability pensionsfromubles per month, dependinghe cause and extent of disability. Noncommissioned officers receive an addition ofercent of the basic pension.
b. Draft Low.
*ollowsollows
Under the new law, long-term disability pensions are to be paid to those disabled ln connection with their work, without regard to age or length of service. Those disabled from other causes must meet eligibility requirements based on age, sex, and length of service as fixed by the Council of Ministers; whether theseore to be different from the present law is not stated. The amount of the pension continues to depend on the degree of disability, the kind of work done by the employee, and his average earnings, but the amount of differentiation will be reduced. The manner in which the basic pension Is to be fixed is shown lo* Presumably the list of occupations and Industries which carry privileged pension status for workers Is being re-examined by Ihe Council of Ministers;eview will undoubtedly be oriented toward providing anincentive to workers to take Jobs Ln accordance with current manpower ollocation needs.
Basic pensions are to be Hupplemented as follows:
For invalids Innd II with non-work-con nee ted disabilitiesn increase ofercent if they hadoears of continuous service in the same enterprise or Institution, andercent if they had more thanears.
For networking invalids innd II with Ian increase ofercent;r acre dependentsnofercent.
For Invalids inho are totally disabled nod require caren Increase ofercent for their care.
Minimum and maximum disability pensions are established as shown in Table 5.
Table 5
Minimum and Maximum Disability Pensions Under the6 Draft Low in the USSR
Minimum
per Month Maximum
Dcgrec of Work-Connected Connected Work-Connected Connected Disability Disability Disability Disability Disability
Group
Group II
Croup III
those completely dlsobled and requiring outside core."
those completely disabled hut not requiring
e. Including those disabled for work at their regular Jobs but able to work irregularly or at other kinds of Jobs.
-
/
Disability pensions' to servicemen (privates) who were workers or employees before entering military service are paid on ihe some terms as to civilians except as follows: (l) pensions are awarded regardless of age or length of service,he minimum pensions for totally disabled veterans arc slightly higher. Pensions for noncommissioned officers areercent higher than those for privates, though they may not exceed the maxima set for privates. Pensions for servicemen who did not work prior toservice and for commissioned officers arc to be established by the Council of Ministers.
The net effect of all these provisions will be to raise considerably the level of disability pensions, particularly for lower paid workers. Por example, under the presentoal miner who was totally disabledesultining explosion and whose earningsubles per month wouldension of yto rubles under the present lawubles under the drafttreet-sweeper who was partially disabled (Grouf II) while at work and whose monthly earningsubles wouldonthly pensionubles under the present lawubles under the new law. epartment store clerk who was totally disabled in an on-the-job accident and whose monthly earningsubles wouldonthly pensionubles under the present lawubles under the new law.
3. Survivors' Pensions.
a. Present Law.
Pensions are paid to the families of workers and employees who die or disappear, provided the worker himself would have been eligibleisability pension. Eligible dependents include the following: children, brothers, sisters, disabled and aged parents,arent or spouse irrespective of age if he cares for children, brothers, or sisters (under the age off the deceased orbreadwinner. Ihe amount of the pension Ishepension to which the deceased or disappeared breadwinnerwould have been entitled; the total amount paid to the family depends on the number of eligible dependenta. In most cases the survivors' pension Is figured on the basis of the pension to which the deceased would have been entitledartially disabled (Group EI) invalid as follows: ependent,ependents,ercent;
3 dependents, ICO percent; and It or moreercent. If the deceased was in the category of basic cadres in designated(coal, metallurgy, andis survivors are entitled to pensions on more generous terms. ' All pensions are Increased byubles per month for survivors living in cities or in workers* settlements.
b. Draft Law.
Under the new lav, pensions will be paid to eligible survivors of workers who die, but not to those whohe list of ellglbles is broadened to include grandchildren of the deceased. The basic survivors' pension is*equivalent to that disability pension to which the deceased himself would have been entitledif therer more dependents, the rateisability will apply; If there arehe rate for Croup II is used; and forhe rate for Group III applies. Thus the amount will depend on the Industry, occupation, and average wage of the deceased and the cause of his death, as shown in Minimum end maximum survivors* pensions arc the same as those fixed for disability pensions. The following supplements are also provided: percent increase in the pensions if therer more survivors and if Ihe deceased died from work-cOuncetedpercent increase in survivors' pensions if the deceased died from non-work-coanected causes and hadears of uninterrupted service in the same enterprise or iustltution,percent increase is paid if he had overears of uninterrupted service. Families of deceased servicemen who had worked prior to military service are treated In the same way as ore the families of deceased civilian workers, although, as with disabilitypercent increase is provided for families of deceased noncommissioned officers. The net effect of the draft law will be to raise survivors' pensions to ubout the same extent that disability pensions are raised.
Under present arrangements, designated categories of(teachers, medical workers, agronomists, and others) receive special pensionspecified number of years of sez*vlce In their professions. Though eligibility rules and amounts of pensions
* boveT
- Hi -
h . Other Provisions of the Draft Law.
vary with the profession, the usual service requirement Isears, and the pension amounts to hO orercent of the averagehe draft low provides for the continuance of pensions of this type, but requires the Council of Ministers to determine "the procedure for the further award and payment* of such pensions. The draft law olso retains the special system of awarding pensions to scientists on privileged terms.
Finally, special old-age, disability, and survivors' pensions are awarded to those who have rendered special service ln connection with "revolutionary, state, public, cultural activity or defense of the USSR" (or to the families of such These are the so-called "personal" pensions which are awarded by the Council of Ministers, by special commissions of the republic, ministries of social security, and by other authorized local government agencies. Under the draft law the Council of Ministers, USSR, Is to establish rules governing the award of such pensions In the future.
When the draft law goes Into effect, those who ore entitled to higher pensions under it will have their pensions Increased All others may retain their pensions unless they exceed the applicable maximum specified in the law; if so, the pensions must be reduced to the appropriate maximum. Finally, pensioners living lo rural areas aod connected with agriculture are paid pensions amounting toercent of those to which they would otherwise be entitled. It Is believed that this provision constitutesower cost of Living usually prevailing in rural areas ratheroncerted policy of discrimination against workers associated with agriculture. Ihe present emphasis on agricultural production, together with the greater opportunity now afforded for limitedfarming (animals and smallends to reinforce the proposition of nondiscrimination.
BLANK PAGE
APPKKDTX A
N INTELLIGENCE
Utile statistical information is available concerning theof the various forms of social insurance and social security in the USSR. It vould be desirable toreakdown of budget allocations for social welfare among kinds of benefits and to know the total number of pensioners, subdivided by categories of pensions.
BLANK PAGE
h
SOURCE REFERENCES
Information
llTV Evaluations, following the classification entry and designated Eval., have the following significance;
Source of Information
Doc
- Documentary
Confirmed by other sources
-
reliable
Probably true
-
reliable
Possibly true
-
reliable
Doubtful
-
usually reliable
Probably false
-
reliable
Cannot be judged
-
be judged
Evaluations not otherwise designated are those appearing on the cited document; those designated "RR" ore by the author of this report. NO RR evaluation i8 given when the author agrees with the evaluation on the cited document.
3-
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Original document.
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