Prospects for the Russia’s Pension System

We find that the present pension system is able to secure long-term formal sustainability. On the other hand, rapid fall of the replacement rate is expected, with the hardest period in 2018 to 2041, when ratio of average pension to average wage will be below 20%. Additional funds needed to keep this ratio at the level of 2006 amount to 2-3% of GDP in 2020-2041. Distributional implications of the pension reform are examined. The present value of losses born by elder cohorts from the reform are estimated to reach 9,9 bln roubles (in 2007 prices). The gender gap in pensions will increase substantially, to reach 36% by 2050. Measures addressing long-term problems of the pension system are discussed.