Pension Mobility within the Eurasian Economic Union and the CIS
Joint report of the World Bank and Eurasian Development bank prepared in collaboration with the LCSR
“Pension Mobility within the Eurasian Economic Union and the CIS”, a joint report of the World Bank and Eurasian Bank of Development has recently been released. In it the experts of the two banks evaluate the prospects of implementing effective mechanisms in the region to tackle pension problems of migrant workers. There are several LCSR research fellows among the authors of the report, including Tatiana Karabchuk, Veronica Kostenko, Anna Almakaeva, and Natalia Soboleva
When over ten million people migrate annually in search for a job, the issue of pension mobility is not simply pressing, but vital for a significant part of the population of the region’s countries.
Pension mobility is a process of inter-state reciprocal recognition of labor migrants’ pension rights. According to the report, introduction of pension mobility in the context of labor migration processes within the emerging Eurasian Economic Union (EaEU) can build on the EU countries’ best practice experience.
The research focuses on the migrant receiving countries (Russia, Kazakhstan, Belarus) and the sending countries (Kyrgyzstan, Tajikistan, Armenia). The lifting of registration barriers and the simplification of permit procedures in labour migration between EaEU countries are important and useful measures, but they cannot provide comprehensive social guarantees for migrants. This is only possible if the problem of pensions is solved.
The authors of the report state that the pension systems of receiving and sending countries are very different. For this reason, the most pressing issues are those of pension policies coordination. This problem can be solved by establishing a common pension space using the principle of proportional pension accrual. This envisages the creation of a system to record labour migration and the length of service of migrant workers in different countries and to ensure communication and offsets between pension funds in the region’s countries.
As a result, a pension fund located in the country where a person lives and where he or she applies for pension will be able to calculate pension and make payments. However, the pension fund will get compensations (transfers) from pensions funds located in those countries where the person worked. Compensations between pension funds may be proportional to the number of years worked in each country.
Therefore, pension mobility should become an integral part of the freedom of movement for workers in the framework of the emerging EaEU single labour market and coordinated social policies. The establishment of the common pension space in the Single Economic Spase and the Eurasian Economic Union countries can become a step forward towards reducing illegal labour migration and developing a system of civilised employment of foreigners.
In macroeconomic terms, an effective pension mobility regime will help improve the flexibility and effectiveness of the use of labour, as a factor of production, and the global competitiveness of the Eurasian Economic Union.