Social welfare system in transition: The reform of the pension system

Résumé du document

The transition from a centrally planned economy to a market economy, from communism to democracy, and from unitary to a federal state had extreme consequences for the overall welfare of Russian population: including health services, social protection, and pension system. The Plan for Social and Economic Policy Development proposed initiatives to restructure the funding and provision of housing, education, health care and pension. In this paper, we will focus on the last theme. As a matter of fact, reforms of the pension system occur in many countries –either developed or emerging-, that makes it a so critical issue and a so interesting theme. Moreover, even if the economic transition is plenty of amazing learning and discovers, it should be nice to see this transition from people perspective and their every day's life issues. There are nowadays 40 millions of pensioners in Russia. And while the life minimum is evaluated at 960 roubles (38€), the average pension is only 1915 roubles (56€). A great challenge is thereby to increase the pension benefit.
The purpose of this essay is to analyse changes in the provision of social services, in particularly the pension system, and evaluate its sustainability. So after a quick general overview of welfare in Russia, the essay describes firstly the former Soviet Union pension system, and secondly how the first reforms took place. Then the essay focuses on the new pension system: reviewing its characteristics, one can find some benefits but also some risks to overcome. As a conclusion, the essay reviews some policy options for reducing these risks and improving the system.

Extraits

[...] Rose R Use of social capital in Russia: Modern, Pre-modern, and Anti-Modern, Post-Soviet Affairs 33-57. Russia Profile, World of Information Walden Publishing, Cambridge, England. Sinyavskaya O Pension reform in Russia: a challenge of low pension age, Project on International Equity (PIE) Discussion Paper. The Economist The shock of the old 8410: 45-47. The Public Opinion Foundation Negative repercussions of the Benefits Reform, Survey. World Bank Pension Reform in Russia: design and implementation, Human Development Sector Unit, Europe and Central Asia Region. [...]

[...] The new system is a multi-pillar pension system (World Bank, 2002). This kind of system has also been implemented in several transition countries –Poland-, many Latin American and some European as well –Italy. The general objectives of the reform are to reduce the complexity, to increase individual incentives to contribute and work longer, and to increase the pension benefit Eligibility conditions All individuals are now covered by the new multi-pillar system. The workers still pay 28 percent of their payroll: called the Single Social Tax (SST). [...]

[...] Social welfare system in transition: The reform of the pension system Table of contents Introduction I. General view on welfare II. The former Soviet Union pension system III. The beginning of the reforms IV. The contemporary pension system V. The benefits VI. The limits and risks VII. The way forward Conclusion References Introduction The transition from a centrally planned economy to a market economy, from communism to democracy, and from unitary to a federal state had extreme consequences for the overall welfare of Russian population: including health services, social protection, and pension system. [...]

[...] Finally, according to the study of Kuznetsov & Ordin (2001), the transition to a funded pension system produces a social welfare gain. The model they used predicts long-run macroeconomic gains, even if the majority of people alive at the moment have to bear the burden of higher taxation during the transition. VI. The limits and risks According to the World Bank (2002), the new pension system faces four main risks The design of the pension system Many features of NDC reforms have not been adopted so far in Russia. [...]

[...] There are nowadays 40 millions of pensioners in Russia. And while the life minimum is evaluated at 960 roubles the average pension is only 1915 roubles A great challenge is thereby to increase the pension benefit. The purpose of this essay is to analyse changes in the provision of social services, in particularly the pension system, and evaluate its sustainability. So after a quick general overview of welfare in Russia, the essay describes firstly the former Soviet Union pension system, and secondly how the first reforms took place. [...]