Pension reform 2019: determinants, consequences, alternatives

Abstract

The paper addresses, mostly with demographic tools, the rationale and consequences of the reform of Russia’s distributive pension system. Contrary to official assertions, mortality conditions do not warrant an increase of the pension age. The reference to a rapidly falling demographic support ratio as a rationale of the reform’s urgency is misleading. A rapid and large increase in the retirement age will considerably reduce the obligations of the Pension Fund of Russia, yet this will be far from enough to balance its budget. The reform creates a fundamentally new and difficult to implement task of ensuring the right to employment of persons deprived of the right to a pension. To the extent that this task can be accomplished, the Pension Fund of Russia and the State budget will be supplemented with additional revenues. At the same time, to the extent that this task remains unresolved, a social group of elderly people who are deprived of income will arise and continue to grow. For a limited time their life will be supported by unemployment benefits. Russia possesses large-scale alternative resources for resolving the pension problem, which consist, among other things, in increasing the collection of pension contributions, labor productivity and employment of the population, as well as in developing funded forms of pension insurance.

Keywords

• population ageing
• mortality
• compulsory pension insurance
• distributive pension system
• statutory pension age
• Pension Fund of the Russian Federation