Pensions are the largest expenditure of the social safety program. Two broad categories of pensions are paid in Russia: labour pensions, which are disbursed on the basis of a worker's payroll contributions, and social pensions, which are paid to individuals who have worked for less than the five years needed to qualify for a labor pension. All Russian citizens who have worked for twenty years are entitled to at least a minimum pension.
The Pension Fund is administered by the Ministry of Social Protection. In the early 1990s, inflation severely eroded the value of the life savings of retirees and many were victimized by financial scams. Beginning in 1994, the government's failure to pay pensions on time led to a backlash among the citizens and rallies were held to protest. By mid-1996 the payment backlog was estimated at 3 billion US dollars.
Today there are safety's in place to ensure this does not happen again. Now workers may draw pensions while continuing to work. In 1995 the Ministry of Social Protection began work on a reform that would establish a three-tier pension system including a basic pension, a work-related pension in proportion to years of service, and an optional private pension program. Unfortunately, in 1995 Prime Minister Viktor Chernomyrdin admitted that the state budget lacked the money to continue indexing pensions according to living costs. Stricter reporting standards for payments were established.
Women are entitled to retire when they reach age 55, and men when they reach age 60. Many women remain in the labour force past retirement age, even while continuing to receive pensions, in order to prevent a drop in their families' standard of living. Mothers of five or more children are entitled to a pension at age fifty. "Mother Heroines" (women with ten or more children) receive an allowance equal in sum to the pension, and the time they spent on child care leave counts toward the minimum twenty years of work required for labour pensions.
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