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. Last Updated: 07/27/2016

Pensioners Line Up for Compensation

Elderly pensioners began lining up Monday at branches of the giant state savings bank Sberbank to collect compensation for savings wiped out by rampant inflation from 1992 to 1995, but bank officials said there was no rush to withdraw cash.


Sberbank's president, Andrei Kazmin, told a news conference that many pensioners who showed up Monday to claim the small compensation were opting to keep it in accounts at Sberbank, where about 70 percent of Russia's household savings are concentrated.


The payout, decreed in May by President Boris Yeltsin, applies only to pensioners over 80. Compensation will be calculated by multiplying account balances by 1,000, though payments are limited to a maximum of 1 million rubles (about $200) per account.


The total cost of the plan, widely viewed as a vote-getting ploy by Yeltsin in his bid for re-election, is estimated at about 4.5 trillion rubles.


Reaction among pensioners at Sberbank offices Monday was mixed.


One pensioner who asked not to be identified said she had received the 1 million ruble maximum. Though she agreed that the payout was linked to Yeltsin's campaign for re-election June 16, she said that wasn't affecting her plans to vote for the incumbent.


Despite a comprehensive publicity campaign, several pensioners interviewed were unaware that they were eligible for compensation.


"I don't believe it," said one 87-year-old, who gave his name only as Ivan. "It is simply just election rhetoric."


Alla Timofeyevna, 85, who had come to pick up her 300,000 ruble pension only to find out it had been delayed for an unspecified reason, was doubtful she would ever receive the money promised by the government.


"The day I receive 1 million rubles is the day it isn't worth anything," she quipped.


Kazmin said the compensation scheme had been received nervously in some of the larger cities in the run-up to the elections. He added that Sberbank has registered larger than average withdrawals from the accounts of private clients recently, but he said he expected a reversal of this trend after the elections.


Kazmin was vague on the implementation of possible future phases to compensate other Russians for savings lost to inflation. Costs of such a plan have been estimated at anywhere from 130 trillion to 700 trillion rubles, depending on the multiple used.He said that by paying out too generous a compensation, Russia could risk runaway inflation of the kind that destabilized Germany in the aftermath of World War I.


Kazmin also said that last week's government decision to allocate 5 trillion rubles from Central Bank reserves to meet the federal budget's needs risks fueling inflation because it amounts to "printing money."