Reform of 2010: are the Long-Term Problems of the Pension System Properly Addressed?

The paper evaluates short-term implications of pension reforms made in 2010, and long-term scenarios of pension system development. We find that if size of pension transfer is fixed, prolonged fall of the replacement rate is expected, which makes situation politically unsustainable. Keeping flat replacement rate requires either increase of pension transfer size by 1 percentage point of GDP each 5 years, or raising rate of pension contributions per 1 percentage point annually. Using broad range of measures, including increase in retirement age is suggested. Raising retirement age to 62 years for men and 60 years for women is substantiated, basing on analysis of demographic indicators. Effect of this measure is estimated.