Over the past three decades, the attitude towards the funded principles of pensions financing has changed in the world and in Russia. It evolved from their idealization and perception as the only panacea for the aging population in the 1980s - 1990s to complete disappointment in their effectiveness and, as a result the crisis of 2008-2009, the cancellation of already initiated pension reforms, which introduced compulsory pension savings. It is clear now that, although the pension savings are also subject to the negative effects of aging, and do not serve as a tool for reducing informal employment or expanding pension coverage, they occupy an important place in the pension systems of many developed and developing countries where they complement the state pension schemes based on distributional financing principles. One of the relatively new approaches to organization of voluntary pension savings, which aims to expand the coverage of such programs, is the principle of auto-subscription or automatic registration. In line with this approach in Russia, the Central Bank of Russia and the Ministry of Finance are developing the concept of individual pension capital.

Our second workshop in the series of events under the topic “Active Ageing Policy and Pension Reforms: Russian and International Experience” will discuss the role of pension savings in the contemporary pension systems with the focus on demographic and economic challenges, as well as the lessons, which the developing countries can learn from the countries that already apply the principles of auto-subscription in their voluntary funded pension schemes.

Speakers:

SERGEY BELYAKOV, President, Association of private pension funds (ANPF)

Russian pension system framework and trends in socio-economic development

According to the Russian Federal State Statistic Service (Rosstat) data, the life expectancy in the Russian Federation can reach 73.25 years for males and 80.78 for females by 2035. At the same time, there is a continuing trend towards population aging, and the demographic dependency ratio is constantly growing. Decreasing the number of employees and growing the number of pensioners are of a global trend. The federal budget expenditures transferred to the Pension Fund of the Russian Federation annually increased are of 3.3 trillion rubles now, which correspond to 20% of the total federal budget expenditures, and will keep increasing according to experts’ estimates. To maintain pensions at the current level with their adjustments only by the inflation rate over the period 2024-2026 will require to increase the transfer from the federal budget to the Pension Fund of the Russian Federation of at least 5 trillion rubles. Under the population’s disposable income falling steadily down, the current pension system while trying to attempt 40% replacement rate will continue to generate poverty and a permanent shortage of insurance contributions to pay insurance pensions diverting federal budget resources in case the funded component of the pension scheme will not be reintroduced.

Dr. HEINZ RUDOLPH, Lead Financial Sector Economist, World Bank

Pension Funds with Automatic Enrollment Schemes: Lessons for Emerging Economies

The presentation will cover main findings from the recently published research paper “Pension Funds with Automatic Enrollment Schemes : Lessons for Emerging Economies”. Since the introduction of the KiwiSaver scheme in New Zealand in 2006, several countries have implemented, or are in the process of implementing, voluntary funded pension systems with automatic enrollment features. Since most of the literature has focused on countries with the common law tradition, including the United Kingdom and the United States, this paper analyzes cases of countries with the civil code tradition, including Turkey, Poland, Chile, Brazil, and the Province of Quebec in Canada. This sample includes mostly emerging economies, with reforms at different stages. Although they are not a substitute for necessary parametric reforms, automatic enrollment schemes offer the possibility of improvements in future retirement income for a significant part of the labor force. The perspectives of the Russia Federation will be analyzed and based on these country experiences. This note stresses that the paternalistic approach of automatic enrollment schemes imposes a great degree of responsibility on governments and requires careful consideration of the design of the system, including the industrial organization of the pension fund industry and default investment strategies. Sufficient time and resources for preparing communication and educational campaigns has played a key role in achieving high rates of participation. 

Moderator:
OXANA SINYAVSKAYA, Deputy Director, Institute for Social Policy, Higher School of Economics

Discussion participants:

EVGENIY YAKUSHEV, Executive director JSC NPF Safmar

YURI VORONIN, Center Director, Center for Legal Support of Social and Economic Reforms, Institute of Legislation and Comparative Law under the Government of the Russian Federation

Venue: Higher School of Economics, Moscow, ul. Myasnitskaya 20, room 311

Date and time: March 21, 2019, 1 p.m. – 4 p.m.

Working languages: English, Russian (simultaneous interpretation)

The online registration before 5 pm on Wednesday March 21, 2019 at https://www.hse.ru/expresspolls/poll/252249867.html is required.

The worshop is of a working nature and does not imply the participation of media representatives.