The Pension System in Modern Russia: Reform after Reform.

Abstract

ABSTRACT In recent years, Russia has adopted a number of laws that have significantly changed the institutional structure of the national pension system (corporatization of pension funds, creation of a system for guaranteeing pension savings, and the freezing of funded pensions). In addition, a very controversial law raising the retirement age came into effect at the end of 2018, and the Bank of Russia and the Ministry of Finance of the Russian Federation have prepared a draft law creating a voluntary system of individual pension capital. Based on a comparison of the key demographic and pension indicators of Russia and countries in the Organization of Economic Cooperation and Development (OECD), the author concludes that there were no valid grounds for the recent increase in Russia’s retirement age (especially for men). He also calls into question the assertions of the draft law’s supporters concerning excessive transfers from the federal budget to the mandatory pension insurance system. Starting from the prior experience of the Russian Federation’s pension sector, an attempt is made to assess the extent to which the enacted laws will support growth in personal savings within voluntary pension schemes. In particular, it is shown that in the coming years, the system of individual pension capital currently under development can only partially replace pension contributions on the long-term money market.