Pages:     | 1 |   ...   | 30 | 31 || 33 | 34 |   ...   | 38 |

4.102 At the same time, all scenarios show a gradual increase in the value of average pension relative to the subsistence minimum. This indicates that with economic growth the real incomes of pensioners will also grow steadily. However, there are two concerns with the patterns of this future growth: a) in the initial period till 2015, despite a low level of current pensions, the growth will be rather slow; and b) as reflected in the falling replacement rate, the growth in pensions will be lagging growth in real wages, which may become a politically sensitive issue.

4.103 A gradual increase in the retirement age by 5 years for men and 10 years for women in the long-term perspective would reduce the system dependency ratio by approximately percent. This makes it possible to provide practically full compensation for the negative impact of the both UST rate reduction of 4 pp. and demographic factors on average pensions.

The replacement rate (assuming the same reduction of the UST rate of 4 p.p.) in 2030 would grow to 33-35 percent, i.e., would be the same or higher than its 2002 level. Even in the case with no expansion in the tax base, the replacement rate would remain above 30 percent. This drastically reduces a risk for budget support to the pension system.

Table 4.13: Summary of the simulation results for replacement rate and potential fiscal costs Scenarios Replacement rate Fiscal costs per annum, % of GDP 2020 2030 2020 Scenarios of Group I 12: base case, no reforms, low growth 27.7 26.4 0.55 0.14: base case, no reforms, high growth 28.9 27.8 0.25 0.12 + 8 p.p. cut in UST rate 21.0 2.14 + 8 p.p. cut in UST rate 22.0 2.Scenarios of Group II 22: 4 p.p. cut in UST rate, expanded tax base, low growth 23.4 22.7 1.70 2.24: 4 p.p. cut in UST rate, expanded tax base, high growth 24.7 23.8 1.35 1.Scenarios of Group III 32: Scen. 22 + increase in the retirement age, low growth 35.5 33.0 - - 34: Scen. 24 + increase in the retirement age, high growth 37.1 34.8 - - Scenarios of Group IV 42: Scen. 32 + reduction of UST privileges, low growth 36.4 33.8 - - 44: Scen. 34 + reduction of UST privileges, high growth 38.0 35.7 - - Scenarios of Group V Scenario 12 + annual immigration of 300,000 28.0 0.Scenario 12 + annual immigration of 500,000 29.1 0.Note: Fiscal costs measured against a target of maintaining the replacement rate at 30 percent.

4.104 Additional policy reforms, related mainly to a twofold increase of the contribution rate for the self-employed and further elimination of tax exemptions, may lead to a modest additional growth in the affordable replacement rate by about 1 percentage point.

4.105 Based on these findings the following recommendations on pension policy could be suggested:

The simulations confirm the need to supplement the proposed reduction in the pension contribution rate with a set of decisions, such as a gradual increase in the retirement age, aimed at a longer-term sustainability of the pension system and an increase in the real value of future pension benefits. A decision on the retirement age is critical for longerterm prospects of the pension system. Further delaying this decision leads to high social and political costs in terms of reduction of the relative value of future pension benefits, and, as argued in this Chapter, is likely to trigger significant longer-term budget liabilities. Moreover, the political difficulties of rising the retirement age may increase in the future as the population continues to age.

The second best solution with respect to the retirement age increase, given the political sensitivity of the issue, would be the introduction of amendments to the Pension Law, which would modify the formula that defines the amount of retirement benefit in a way that create much stronger incentives to delay retirement voluntarily.

Trends in the share of the taxable payroll in GDP will play a critical role in determining future results of pension reform. This highlights the importance of policies aimed at stabilizing income and payroll taxation (to facilitate stability of taxpayers expectations), as well as at the removal of various administrative barriers in the economy that currently hold back reduction of shadow incomes/wages.

It seems unlikely that more radical cuts in the UST rate (in excess of 4 percent points) could be compensated for by the combined positive impact of the tax base expansion and an increase in the retirement age. Under the circumstances, the first best strategy for reducing the UST rates would be to avoid longer-term commitments regarding future additional cuts in the contribution rate that would exceed 4 p.p. It may be rational to do tax rate reductions in stages -- giving the system some time to stabilize after the initial round of UST rate cut of 4 p.p., and after accumulating certain experiences of operating with new parameters, planning for next steps of tax cuts and pension reforms.

At the same time, if the government is convinced that the UST rate cut larger than 4 p.p.

is urgently required to accelerate the formalization of the economy and sustain growth, it should be prepared to provide a substantial compensation to the Pension Fund from regular budget revenues (including the Stabilization Fund). In particular, if the current proposal is finalized to cut the average UST rate by 8 p.p., an annual budget transfer of 1.0-1.1 percent of GDP may be needed immediately to avoid either decline in real value of current pensions or accumulation of pension arrears. The compensation has to be provided until considerable improvements in the revenue performance of the pension system materialize and/or policy decisions are made, which reduce Pension Funds financing needs.

REFERENCES Andrews, Emily S. 2001. Kazakhstan: An Ambitious Pension Reform. Social Protection Discussion Paper No. 0104. The World Bank. Washington DC.

Anusic, Zoran and Katerina Petrina. 2003. Reforming Ukrainian Pension System. Background paper for the Ukrainian CEM. Mimeo. The World Bank. Washington DC.

Balcerzhak-Paradovska B., A. Chlon-Dominczak, I. Kotovska, A. Olejnichuk-Merta, I.

Topinska, and I. Woycicka. 2003. The Gender Dimension of Social Security Reform in Poland. In E. Fultz, M. Ruck, and S. Steinhibler (Eds.) The Gender Dimension of Social Security reforms in Central and Eastern Europe: Case Studies of Czech Republic, Hungary, and Poland. Budapest: ILO.

Baskakov V.N., A.L. Lelchuk, and D.V. Pomazkin. 2003. Modeling the Pension System of the Russian Federation. In The Pension System: A Model for Russia and International Experience. Moscow: Moscow Public Science Foundation. pp. 10-90.

Balls, Ed, and Gus ODonnell. 2001. Reforming Britains Economic and Financial Policy:

Towards Greater Economic Stability, HM Treasury, Palgrave.

Beetsma, Roel M.W.J., and Xavier Debrun. 2004. Reconciling Stability and Growth: Smart Pacts and Structural Reforms, Staff Papers, International Monetary Fund, Vol. 51, No. 3.

Bolshakova, Ekaterina. 2004. Participation in the Pension System by Employees of Small Enterprises. Summary of the existing regulatory framework. Mimeo. Moscow, IET (In Russian).

Business Environment and Enterprise Performance Survey (BEEPS). 1999. World Bank and European Bank for Reconstruction and Development.

http://info.worldbank.org/governance/beeps/ Business Environment and Enterprise Performance Survey (BEEPS). 2002. World Bank, and European Bank for Reconstruction and Development.

http://info.worldbank.org/governance/beeps2002/ Chand, Sheetal K. and Albert Jaenger. 1999. Reform Options for Pay-As-You-Go Public Pension Systems. 1999. Social Protection Discussion Paper Series. No. 9927. The World Bank. Washington, DC.

Chen, Shaohua and Martin Ravallion. 2000. How Did the Worlds Poorest Fare in the 1990s The World Bank. Washington, DC.

Collier, Paul, and Jan W. Gunning. 1999. Trade Shocks: Theory and Evidence, in Trade Shocks in Developing Countries, Oxford University Press.

Concept of the Pension Reform. Employers Position. 2001. Russian Union of Industrialists and Entrepreneurs. Mimeo. May 31. Moscow. (In Russian).

De Castello-Branco, Marta. 1998. Pension Reform in the Baltics, Russia, and Other Countries of the Former Soviet Union. IMF Working paper No. 98/1, Washington, DC.

Denisova, Julia. 2001. We are paid: where and how much Results of comparative analysis of base salaries of key employment categories in Moscow, St. Petersburg, Nizhny Novgorod, Ekaterinburg and Perm. Ekonomika I Zhizn. Vol. 13-14. July. (In Russian).

Dmitriev M., D. Pomazkin, O. Sinyavskaya, and A. Stolyarov. 1999. Reform of Particular Social Sectors in Russia. Moscow, Institute of Economy in Transition (In Russian).

Easterly, William and Luis Serven, Eds. 2003. The Limits of Stabilization. Infrastructure, Public Deficits, and Growth in Latin America. The World Bank. Washington, DC.

Eismont O., S. Chernyavsky, and J. Rotwell, 2003. Overview of a Possible Impact of Russian Energy Sector Restructuring. The Russian School of Economics. Moscow.

Gimpelson, V.E. 2002. Employment and Structure of the Russian Bureaucracy: between the Soviet Nomenklatura and Public Service to Civil Society. Higher School of Economics, Moscow (In Russian).

Gray, Cheryl, Joel Hellman, and Randi Ryterman. 2004. Anticorruption in Transition 2:

Corruption in Enterprise-State Interactions in Europe and Central Asia 19992002.

The World Bank. Washington DC.

Hamilton, Ellen. 2004. Exploring Housing Subsidies to Households in Russia. Mimeo. The World Bank. Washington, DC.

Higher School of Economics (HSE). 2003. Comparative Pay and Benefits Survey, Public and Private Sectors. March.

Higher School of Economics (HSE). 2004. Urgent Tasks of the Reform of Executive Authorities Apparatus. Kommersant. February 12.

Holzmann, Robert. 1998. Financing the Transition to Multipillar. The World Bank.

December. Washington, DC.

Holzmann Robert, Indermit Gill, Richard Hinz, Gregorio Impavido, Alberto R. Musalem, Michal Rutkowski, and Anita Schwarz. 2004. Old Age Income Support in the 21st Century: The World Banks Perspective on Pension Systems and Reform. The World Bank. May. Washington, DC.

IMF. 2002. Slovak Republic: Selected Issues and Statistical Appendix. IMF Country Report No. 02/210. September, Washington DC.

IMF. 2003a. Russia Medium Term Fiscal Stance and the Potential Role of an Oil Stabilization Fund. February. Washington, DC.

IMF. 2003b. Russian Federation. Staff Report for the 2003 Article IV Consultation.

Washington, DC.

IMF. 2004. Russian Federation. Staff Report for the 2004 Article IV Consultation.

Washington, DC.

Information For Democracy Foundation (INDEM). 2002. Regional Public Fund Informatics for Democracy. Pay and Corruption: How to Pay to Russian Public Servants.


Institute of Urban Economy. 2003a. Practices in Reforming the Housing and Utility Sector.

Moscow (in Russian).

Institute of Urban Economy. 2003b. Review of Government Expenditures for Russia. Final Report for the component Housing and Utility Sector. Report prepared for the TACIS. Moscow.

Kakwani N. and Zurab Sajaia. 2004. New Poverty Thresholds for Russia. The World Bank.

Mimeo. May. Washington DC.

Kolodeznikova, Anastasia, and Raymond Struyk. 1997. Proxy Means Testing for Russia:

Challenges and Perspectives. Urban Institute. Moscow. September.

Kopits, George F. Ed. 2004. Rules-Based Fiscal Policy in Emerging Markets: Background, Analysis, and Prospects. London, Palgrave Macmillan.

Kopits, George F. and Steven A. Symansky. 1998. Fiscal Policy Rules, IMF Occasional Paper No. 162, Washington, DC.

Kwon, Goohoon 2003. Post-crisis Fiscal Revenue Developments in Russia: From an Oil Perspective, Public Finance and Management, #3(4).

Misikhina, Svetlana. 2002. Poverty, Housing Subsidies, Discount Payments for Housing and Communal Services in Six Regions of the Russian Federation in 2000. Mimeo.


OECD. 2002. OECD Economic Outlook, Chapter 4.

OECD/SIGMA OECD (Organization for Economic Co-operation and Development/Support for Improvement in Governance and Management). 1997. Budgeting and Monitoring of Personnel Costs. SIGMA Paper No. 11.

Perry, Guillermo. 2004. Can Fiscal Rules Help Reduce Macroeconomic Volatility In Kopits (2004).

Pinto, Brian. 1987. Nigeria During and After the Oil Boom: A Policy Comparison with Indonesia, The World Bank Economic Review, 1 (3).

Plevko, Snjezana. 2004. Romania Pension Policy Note. Draft. The World Bank.

Washington, DC.

Poletaev, Andrey, Arganovich, Mark, and Zharova, Ljubov. 2003. Russian Education in the Context of International Indicators. Moscow (In Russian).

Population of Russia. 2002. Moscow. Goskomstat (In Russian).

Posarac, Aleksandra and Mansoora Rashid. 2002. The Non-income Dimension of Poverty:

Russia. Mimeo. The World Bank. Washington, DC.

Rofman, Rafael. 2002. The Pension System and the Crisis in Argentina: Learning the Lessons. Background Paper for Regional Study on Social Security Reform. The World Bank. Mimeo.

Roik, Valentin. 2003. Financing of Social Extra-budgetary Funds. Pensionnyue Fondy i Investitsii, issue 6 (In Russian) Roskomstat 2002a. Cadre of State Authorities in Russia. Moscow.

Roskomstat 2002b. Employment and Pay to the Employees of State and Municipal Entities as of October 2002. Statistical Bulletin, Moscow.

Roskomstat 2003. Employment and Pay to the Employees of State Authorities and Local SelfGovernment. www.gks.ru.

Rutkowski, Michal. 2002. Pensions in Europe: Paradigmatic and parametric reforms in EU Accession countries in the Context of EU Pension System Changes. Journal of Transforming Economies and Societies, 9: 1: 2-26.

Rutkowski, Michal. 2004. Home-made Pension Reforms in Central and Eastern Europe and the Evolution of the World Bank Approach to Modern Pension Systems. In Martin Rein and Winfrid Schmahl (Eds.) Rethinking the Welfare State: the Political Economy of Pension Reform. Martin Edward Elgar. Cheltenham and Northhampton.

Schwarz, Anita M. and Asli Demirguc-Kunt 1999. Taking Stock of Pension Reforms Around the World. Social Protection Discussion Paper No. 9917. The World Bank.

Washington, DC.

Pages:     | 1 |   ...   | 30 | 31 || 33 | 34 |   ...   | 38 |

2011 www.dissers.ru -

, .
, , , , 1-2 .