Issues Of Pension Rights Organization For Population Within Eeu

The architecture of pension protection for population in EEU participating countries

Different mechanisms are used to organize systems of pension protection for population (Grigorieva, Gorshkova, & Mytareva, 2017) (figure 1 ). They are determined by the historical development of the pension system, peculiarities of economic relations in the country and other factors. Basing on these, every country, applying a certain set of elements, constructs its own specific architecture of the pension protection for population.

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As practice of pension organization shows, when the national system of pensionary protection of population is organized, governments of countries apply combination of several economical mechanisms creating a complex structure. The most popular is simultaneous combination of 3 economic mechanisms: state pension provision (its aim is providing population with minimal social pensions, state pensions for certain groups of population (for example, military emploees, government emploees and so on), compulsory pension insurance and non-state owned pension insurance (provision). In this case, minimal pensions and state pensions receive finance from the State budget. Pensions from mandatory pension insurance and non-state-owned pension insurance are based on pension tax paid individually or by an employer for a worker (at full or pari passu).

To prove this argument, the experience of the pension protection within EEU is interesting. Having common roots of the national pension system for population (from the times of the USSR), every country had its own way, choosing individual profile. Table 1 shows economical mechanisms depending on the way of pension capital formation, applied in the systems of pension protection for population within EEU.

Thus, on the area of EEU most systems of pension protection are rather complicated, but all countries provide minimal social protection in the form of social/basic pensions. Pension systems in the Republic of Armenia and the Republic of Belarus especially stand out on the background of other countries. In particular, the former is characterized by a funded element, where citizens themselves have a special role in pension formation; and the latter (the Republic of Belarus) has the predominant role of the state budget in pension formation (Grishchenko, 2016). Many countries abandon the second system due to the increase in the demographic burden on the system.

Issues of pension formation in the economy integration and digitization in countries of EEU

Pension organization in EEU countries is directly connected with the earnings, as the income loss is a ground for pension payment in the participating countries according to some parameters. The importance of this aspect for labour migration within EEU was stressed in the Report “Barriers, withdrawals and limitations of EEU”. According to the point 90 of the Report “Organization of the common labour market, proper social and pension provision of the working citizens in participating countries is possible when the countries observe mutual non-discriminatory approach to the working citizens. In the agreed-upon list of challenges there is one limitation applied to all participating countries. There is no equality in providing pension to citizens of participating countries within their area”. To solve this problem it was suggested to enter into a separate international agreement on the pension provision of workers in EEU participating countries. The project has been created but not has not been signed yet. According to the data of the Pension Fund in the Russian Federation only the Republic of Belarus signed a Cooperation agreement in the sphere of social security in 2006.

The most limitations when organizing and recording pension rights arise in cases of “labour migration to another country” (there a necessity to record employed service within another country when granting of a retirement pension); labour migration to another country and further claim of the pension here; when a pensioner moves to another country for a permanent citizenship” (Karabchuk, 2014). Here, the processes of official labour migration can be theoretically traced in a full rate, and when forming regulatory control and prove documentarily the organized pension rights, then the economy digitization in EEU countries will neutralize the obtained results.

One more problem is different level of the earnings on the area of EEU, which is a starting point of pension rights organization (figure 2 ), as they are the source of the insurance premium payment. Equalize it deliberately is impossible as well as using equal rates is not sound, hence, organization of equal pension in the country with low income can result in insufficient standard of life for a pensioner when he moves to another country.

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Note: 1) The parameter is calculated by the rate of the national currency per year: in Belarus – by average weighted exchange rate of the Belarusian ruble to the USA dollar, in Armenia, Kazakhstan, Kyrgyzstan and Russia – by the average weighted exchange rate of the national currency to the USA dollar.

2) With the account of compulsory social insurance made by the employer.

These problems are aggravated by the fact that the system of pension protection of population is not ready to economy digitization (Grigorieva, Mytareva, & Shkarupa, 2019). As integration in EEU increases social mobility, and economy digitization creates common digital space, the opportunities for earnings widen. Dealing with problems the states encounter when providing pension protection of the population we can note:

1. Earnings from business in the Internet are not always legalized, as they are not clear for agencies responsible for organization of pension rights, hence, there are no obligatory payments (taxes, insurance payments and so on) necessary for pension organization. It is conditioned by the fact that people earning in the Internet, first, are often not registered according to the labour legislation, secondly, do not declare the earnings, thirdly, there is no territorial binding to the place of business, that is the citizen of one state can have business in another country thus creating “digital” labour migration.

2. Developing information and communication connections between all the participants of pensionary relations which include: receiving state services via remote application to corresponding bodies; providing full information on changes pension protection (via different informational portals in the Internet); access to information on the status of own pension assets in specialized financial institutions (state and private); about formed pension rights depending on the area (state) of the legalized labour income without the account of population who have no access to modern information and communication technologies.

Lack of possibility to use the worldwide web to access information is conditioned by “digital inequality”, caused by presence of small areas where internet-providers do not give access to the Internet as it is not profitable, due to non-coverage of remote places by the operators of the cellular communication. According to the cross country analysis of the International Telecommunications Union (ITU) “Percentage of people using the Internet” (figure 3 ) (Percentage of people using the Internet, 2019), in EEU countries there is a significant inhomogenuity, in particular according to the years’ 2017 results the greatest part of the population using the Internet was in the Republic of Kazakhstan (76.43%), and the least in the Republic of Kyrgyzstan (total 38.00 %). In the Russian Federation, the Republic of Belarus and Armenia the indexes are rather high, but there is a perspective to increase them, which is proved by the results of 2018, where the Russian Federation sharply increased this parameter.

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Possibilities to harmonize the systems of pensionary protection of population in EEU countries

Harmonization of the systems of population pensionary protection in EEU countries is a process aimed at the formation of ways and mechanisms to convert pension rights of the population, due to its labour migration or remote employment via the Internet on the territory of a foreign country.

The most perspective solution of the problem is a supranational organization on organization of the population pension protection on EEU area, responsible for collection of premiums of the labour immigrants, recording employed service on the area of EEU participating countries, and then providing pension payments to the population under the national legislation. In addition, such an organization would provide more effective interaction between the countries on the issue of recording pension rights of the population and providing pension payments, the means accumulated in it could be invested and used for the development of EEU participating countries.