Pension reform is a key policy challenge in Russia. This paper examines how pension spending could increase in Russia in the absence of reforms, quantifies the impact of some recent proposals, and suggests some alternatives that would ensure public pension benefits - relative to wages - not fall from current levels while containing spending.
Despite their increasing fiscal burden, the public pension systems of BRO countries are failing to provide adequate social protection. Although there is a broad consensus about the need for pension reforms, BRO countries are debating whether to embark on systemic reforms or whether to correct the distortions in their pay-as-you-go (PAYG) pension systems. The paper reviews the measures taken by BRO countries during the transition period to address their pension problems and examines the options for further reform. It makes a strong case for a gradual reform approach aimed at establishing a multi-pillar system over the long run, but initially focused on implementation of “high-quality” reforms of the PAYG system.
This report provides a critical review of reform initiatives undertaken by the Russian government to overhaul retirement provision in Russia and documents recent evolution occurring in the Russian private pension market.
The article points out the problems of the RF pension system, as well as pensioners' feeling in rich and depressed regions, and the necessity of effective management of investment funds of the Russian Federation Pension Fund.
Reforming retirement systems has become a major challenge for policy makers in Russia and around the world. The Russian Federation has undergone a major systemic reform of its pension system, shifting from a single, publicly managed system to one supplemented by a mandatory, privately managed and occupational-funded component as well as voluntary pension arrangements. The reform tackled a set of demographic, social and economic problems inherent to retirement income provision and was designed to improve the security of retirees by ensuring the long-term financial and fiscal stability of the pe.
The Russian Federation has undergone a major reform of the pension system which has resulted in a shift from a single, publicly managed system to one supplemented by a mandatory, privately managed occupational funded component and voluntary pension arrangements. The reform aimed to tackle a set of problems of demographic, social and economic order inherent to retirement income provision and was viewed as a way to improve old-age security of retirees in Russia by ensuring long-term financial and fiscal stability of the pension system and adequacy of pension benefits. This book examines these reforms and new challenges related to the reforms. Most prominent among the challenges is the need to further strengthen the pension system regulatory capacity and enforcement powers of the authorities in charge of the oversight of private pension institutions
The overwhelming number of contributors that have been allocated into the default option is one of the main characteristics of the Russian second pillar. This finding confirms that the level of financial literacy for most of the participants is not sufficient to make informed portfolio selections. The authors argue that the current system is perfectly consistent with a solid second pillar, but the authorities should focus their attention in the strategic asset allocation of pension funds. Since in the short and medium term it is unlikely to see improvements in financial literacy of individuals that may overcome the complexity of these decisions, the authorities can play an important role in designing default investment portfolios that can be aligned with expected replacement rates for the contributors. The current investment regulation of the default option induces investment in inefficient portfolios that are unlikely to bring returns above inflation, and probably will result in very low replacement rates for contributors. Further liberalization of the investments of the pension portfolio; improvements in the governance and supervision of the pension system; and greater certainty about the ownership of the funds are necessary steps to complete the pension reform launched in 2002.
Chile’s pension system came under close scrutiny in recent years. This paper takes stock of the adequacy of the system and highlights its challenges. Chile’s defined contribution system was quite influential when introduced, and was taken as an example by other countries. However, it is now delivering low replacement rates relative to OECD peers, as its parameters did not adapt over time to changing demographics and global returns, while informality persists in the labor market. In the absence of reforms, the system’s inability to deliver adequate outcomes for a large share of participants will continue to magnify, as demographic trends and low global interest rates will continue to reduce replacement rates. In addition, recent legislation allowing for pension savings withdrawals to counter the effects from the COVID-19 pandemic, is projected to further reduce replacement rates and increase fiscal costs. A substantial improvement in replacement rates is feasible, via a reform that raises contribution rates and the retirement age, coupled with policies that increases workers’ contribution density.
