Mandatory Social Insurance in Russia: Ways of Reforming

Abstract

Despite near 30 years of post-Soviet reforms, Russia has not developed an effective system of mandatory social insurance. This has many negative, social, economic and political consequences. The main ones are low coverage of social risks and mass paternalism. An ordinary employee does not feel involved in the formation of his own well-being, especially in the field of pensions and medical care, and can’t independently dispose of those mandatory contributions that the employer makes in his favor. Therefore, in Russia there has long been a need, not just for cosmetic amendments, but for a radical reform of the mandatory insurance system. Its main element should be the involvement of the employee in the management of funds collected in special insurance institutes. It is proposed to move from a unified rate of deductions to personalized contributions, the amount of which depends on the family status of the employee, his or her health, and other personal characteristics. The organizational form of the updated system of mandatory social insurance can be a United Social Insurance Fund (instead of the current three funds), managed on an equal basis by representatives of employees, employers and the state.