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Vol. 53, No. 3, pp. 247-267 (2002)

“Russia's Demographic and Pension Crises in the 1990s -A Preliminary Observation on Inter-generational Equity Problems in Transition Countries-”
Masaaki Kuboniwa (The Institute of Economic Research, Hitotsubashi University), Shinichiro Tabata (Slavic Research Center, Hokkaido University)

This paper intends to develop an analysis of demographic and pension crises of Russia in the early transition period in order to clarify perspectives on the configuration of inter-generational equity problems in Russia. This paper consists of the following two parts:
Part 1 focuses on the Russian demographic crisis in the 1990s, which derived from marked declines in male life expectancy and national birth-mortality ratio. Part 1 develops further a comparative analysis of Russia's demographic situation by employing the results and prospects shown by the official and international population statistics. Based on the 1990 mortality schedule, part 1 also provides an estimate that there were 2 million premature male deaths during 1991-2000, equivalent to 20% of all male deaths. Although the crisis cost much and restoring the loss due to the crisis will be very difficult, it decreased the pension burden during the period and will continue to dampen the burden up to 2015.
Part 2 focuses on Russia's pension crisis in the 1990s. The pension crisis of Russia during the period was characterized by extremely low level of pension allowance, barely above the subsistence minimum. This was explained, first, by the high system dependency ratio, too high to maintain the PAYG system. Second, the actual contribution rate has been low, due to the loose control over contribution payments. Other reasons arose from the tricky methods of pension calculation that were devised by the government to evade full indexation to inflation. Owing to the recent economic recovery, a substantial pension reform, including a funded scheme, started at last from the beginning of 2002.