Summary
While economic indicators provide reason for optimism among Russia's citizens, the poor financial state of the national pension system poses a threat to the standards of living of current and future Russian retirees. Without the right kind of reform, these retirees will find themselves with a lower standard of living and increased poverty. Most current retirees live on a basic fixed-income pension provided by the state -- the monthly pension is roughly 2,726 rubles (US$103) per month. Russia's current pension system is undoubtedly fraught with pitfalls and problems, but these problems can be alleviated with government policies that fine-tune pension rules and improve economic regulation. Fundamental pension reform has been a step in the right direction for improving social insurance in retirement. Whether the Russian government can push through all their reforms depends on the how well policy makers can cope with the political ire arising from their reforms.
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Extract
Changing the System
Over the past decade Russia's economy has been buoyed by renewal and newfound prosperity. Since the financial meltdown of 1998, the country has achieved positive economic progress. Driven by higher oil prices, Russian exports totaled US$317 billion, and annual GDP growth reached a significant 6.8 percent. The percentage of population below subsistence level dropped from 29 percent in 2000 to 17.6 percent in 2004 and continues to decline.
However, while economic indicators provide reason for optimism among Russia's citizens, the poor financial state of the national pension system poses a threat to the standards of living of current and future Russian retirees. Without the right kind of reform, these retirees will find themselves with a lower standard of living and increased poverty. Most current retirees live on a basic fixed-income pension prov...See the full content of this document
