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Financials

UPDATE 1-Putin aide: not inevitable Russia will raise retirement age

(Adds detail, quotes, context)

MOSCOW, May 28 (Reuters) - Russia’s pension system faces a growing deficit that must be tackled, but raising the retirement age is not the only option, President Vladimir Putin’s economic aide Andrei Belousov said on Saturday.

However policy alternatives such as raising tariffs or social payments “are rather tough,” he said on the television programme Vesti when asked if the retirement age had to rise.

Putin said late last year the retirement age would have to go up at some point but the time had not yet come.

Russian women can now receive pensions from 55 years old and men from 60 years. The Kremlin has treaded cautiously with the politically sensitive issue but supporters of a higher retirement age argue it is essential because the country’s workforce is shrinking.

“Of course it is not inevitable, but the alternatives are rather tough,” Belousov said.

“The alternatives are raising tariffs, social payments,” he said. “Today our Pension Fund is not balanced, it has a deficit of around 2 trillion roubles ($30.4 billion) and the trend is for it to grow. Something needs to be done.”

The issue has become more urgent recently as Russia’s economy has slumped into recession and the budget has been in deficit. Raising the retirement age would help curb the deficit.

Belousov also said in the interview shown on Saturday there was a consensus that it was not possible for Russia to achieve annual growth of more than 1-2 percent in the foreseeable future with its current economic model. ($1 = 65.8155 roubles) (Reporting by Alexander Winning; Editing by Tom Heneghan)

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