Microanalysis of the Russia's Pension System

The analysis is based on the Russia Longitudinal Monitoring Survey (RLMS). Individual replacement rates are estimated for the first time. Russian pension system proves to be oriented rather on social policy objectives than on smoothing consumption over the life cycle. The efficiency of pension system happens to be relatively low - for instance, over 1/3 of base pensions is paid to people with income above median level. We give proofs that social policy for working and non-working pensioners should not be the same, as they have drastic differences in the income level. Estimates are given for possible economy of pension system financing if benefits are provided on a more focused basis. A new approach to the analysis of incentives and impediments for raising retirement age is suggested. Its application demonstrates that substantial part of pensioners is willing to work further in exchange for material stimulus. Most likely they would support higher retirement age if they realized that this will result in higher pension benefits.