The Transition from Distributive Pension System to Accumulative Type: The Results and Efficiency Forecast

Abstract

The paper presents comparative analysis of two models of pension system: accumulative and distributive (pay-as-you-go) ones based on Russian and world experience. It is shown that "the effect of dual burden" is formed within the transition period which lasts about 50 years and will reach its maximum in 22 years after the start of the reform. Under Russian conditions returns on pension capital fail to compensate for inflation and they are significantly lower than indexation of distributive pensions and wages growth rates. The model simulations have provided the following results: given the length of accumulation for 40 years; the longevity period - 19 years; employees-retirees ratio is going down, the accumulative pension system is likely to be more effective than the distributive one if returns on pension capital are not less than GDP growth rates and operational costs of the accumulative system are equal to zero. Otherwise the distributive pension system is more preferable.

Economic Guarantees Of The Pension System

“…In economically weaker countries, average pension incomes are higher: in Greece -50 thousand rubles, in Denmark -150 thousand rubles, in Finland, Israel and a number of other countries -100 thousand rubles (). In this context, we can conclude that changes in the pension system of the Russian Federation are required, but they should be different from those proposed by the Government of the Russian Federation (Ilyin & Morev, 2018b;Dmitrieva, Petukhova & Ushakov, 2010).…”

Insurance Pension Reform: Strategic Challenges and Tactical Risks

“…of the population is one of the functions of the state and a condition for the long-term socio-economic development of the national economy. The fulfillment of this function by the state involves objective difficulties that are due, on the one hand, to the complexity of the object itself (the pension system) and the multifactorial nature of its interaction with various sectors of the economy and society, and on the other, to the duration of its functioning (its minimum period is represented by two generations and is termed the "pension cycle" 1 ) [3][4][5].…”