Pension system in quest for balanced scenario

1. Gaidar Institute for Economic Policy Pension system in quest for balanced scenario Nazarov Vladimir

2. Structure of pension 3 pillars: Conditions for pension entitlement • basic pension min record period – 5 years • PAYGO NDC pension age: 55 - w, 60 – m • FF NDC + minimum living standard guarantee + “social pension” (people who don’t have 5 years record period receive social pension equals to minimum living standard at 65 – m, 60 – w) Rules of indexation 1) Basic pension + PAYGO NDC Every year according to the PF revenue growth per pensioner but not less than inflation 2) Minimum standard guarantee, social pension – according to minimum living standard

3. Social “insurance” tariffs – high burden,% of salary Basic pension – solidarity tariff + federal budget PAYGO NDC – “individual” tariff + federal budget FF DC - “individual tariff” + federal budget (modest co-financing program) Social pension – federal budget Minimum living standard guarantee – federal and regional budgets

4. Aging of population (thousands of people)

5. Basic scenario - finance

6. Basic scenario – replacement rate • The cost of fixing the replacement rate at 2012-level: • 1% of annual tariff increase or • 1% of GDP as every 5 years increase of federal budget transfer to the Pension Fund

7. Deficit reduction – reform proposals