Photo: FROM PERSONAL ARCHIVE

The pension system, already established in Russia, is, in principle, quite stable. Its current difficulties are primarily a consequence of political decisions and populist measures. And this can be fixed.

Three levels - most reliable

Most of the controversy in the pension industry is currently flaring up around the funded system. This is justified: preserving pension savings is the most pressing issue today. However, this is only part of the problem. The most important question is what needs to be done to ensure that our country has a balanced pension system?

The global expert community has long recognized the three-tier pension system as the optimal model for organizing pension provision. This, in particular, was repeatedly stated by representatives of the World Bank and the OECD, who conducted studies of pension systems in different countries.

What is a three-level savings system? The first level - the redistribution system - is financed by insurance contributions and provides a guaranteed level of pensions, largely dependent on length of service. The second level - the mandatory funded system - provides additional differentiation of pensions depending on income and protects against the demographic risks of the first level. The third level is a set of individual and corporate pension programs with incentive taxation in various financial institutions (non-state pension funds, insurance companies, banks, mutual funds, investment accounts, etc.). It provides an increased coefficient of replacement of lost income based on the current level of consumption of the citizen.

The ratio of levels of the system depends on the socio-political and economic capabilities of the state. Developed countries with a high level of per capita income are characterized by a fairly high level of pension provision, which develops primarily due to the tradition of forming individual savings. The introduction of a mandatory savings system always requires additional expenses for the transition period, when workers must both finance pensioners and form their own savings. This is difficult to implement in stable economic systems.

However, it is the use of all three “airbags” that gives the pension system of any state long-term sustainability. In countries where there is no second and third pillar, the retirement age has to be raised to ensure a balanced pension system in the context of an aging population.

What to do with the current system

Currently, Russia has already built a three-tier pension system, and a significant change in its architecture, the abolition of one of the three levels, in the future will lead to a worsening of the situation in the economy as a whole and to a significant drop in the standard of living of pensioners.

The current imbalance in the pension system is largely a consequence of political decisions and populist measures: reduction of insurance premium rates, accelerated indexation of pensions, delay in reforms of preferential pensions, hushing up the topic of retirement age and the problems of working pensioners.

What levers of influence are available today on the pension system and how can they be applied?

The first is the fixation of pension legislation, which now consists of hundreds of legislative and regulatory acts and is constantly being amended without taking into account the consequences for the pension system as a whole. It would be correct to consolidate pension legislation into a pension code, the structure of which would correspond to the existing structure of the system, and introduce a moratorium on any legislative changes until the adoption of the code.

Why are benefits harmful?

The second is a revision of the “pension legacy,” that is, those attitudes and norms whose operation in modern conditions leads to an imbalance in the pension system. Here it is worth distinguishing between the legacy of the “Soviet past” and the innovations of recent years. Many features of the Russian pension system are inherited from the pension system in the USSR. For example, the retirement age (55 years for women and 60 years for men) was introduced 80 years ago. The system of “early” pensions is also a legacy of the long past. But such innovations as reducing the amount of insurance premiums for individual entrepreneurs or zero contribution rates for certain types of activities were adopted not so long ago.

With regard to historically established pension obligations, the role of the state is large, and here changes must be made very carefully. For example, raising the retirement age should be carried out gradually, accompanied by an explanatory campaign about the problem of aging and the need to rebalance the pension system, taking into account the interests of younger generations. It is imperative to preserve the possibility of early retirement with a reduction in its size, and also to develop a program to promote the employment of older people.

The issue of pension benefits needs to be resolved more radically. A significant part of them is cross-subsidization. Benefits for certain categories are implemented at the expense of the “common pot” and lead to a reduction in the size of pensions for ordinary pensioners.

Tuna eating tax

Third, solving the problem of the self-employed population. Today, according to the Ministry of Labor, more than 20 million people work “in the shadows” and do not pay insurance premiums. On the one hand, an administrative decision is possible. For example, introduce, as in Belarus, a tax on parasitism or fine employers for “gray” employment. You can announce tough measures - those who do not pay contributions will not receive a pension. Indirectly, this mechanism begins to work in the new pension formula, which provides for increased requirements for the required work experience.

On the other hand, the solution may be to build citizens’ trust in the state in matters of pension provision. One of the results of the 2002 reform was the emergence of citizens’ personal interest in their pension future, in monitoring the timely and full payment of insurance contributions by the employer.

In defense of the “silent ones”

Fourth, expanding the opportunity for citizens to participate in the savings system. Amendments to pension legislation, adopted without public discussion, stipulate that “silent people” will lose their funded pension if they do not make a choice by the end of 2015. However, people objectively could not make a decision on transferring savings, including because until now the forms for submitting the corresponding application to the Pension Fund have not been approved.

It is urgent to change the proposed paradigm: maintain the default contribution of 6% for the formation of a funded pension and lift restrictions on the choice of non-state pension funds and management companies. And for those who fundamentally do not want to form a funded pension, be given the opportunity to allocate 6% to an insurance pension.

How to balance the Russian pension system