Pension Reform Options for Russia and Ukraine: A Critical Analysis of Available Options and Their Expected Outcomes (with a Focus on Labour Market, Industrial Restructuring and Public Finance)

Abstract

Russia and Ukraine are in the process of many changes stemming from economic transition, restructuring, demographic change and other various ongoing challenges. In terms of the ongoing challenges in each country, there are specific problems related to historical developments, such as large scale heavy industry, but also potential opportunities that rarely occur in other countries such as the significant additional income from the countries' abundant natural resources. Both countries have good prospects for the future despite the many challenges. Among the challenges is industrial restructuring taking into account the social dimension, which includes adjusting the current arrangements of pension systems. In the best scenario this could mean a pension reform. The term 'pension reform' can be understood in various ways. In this paper we analyse a wide variety of possible pension system designs. The designs vary by target as well as the various ways to reach those targets. In all cases there may be costs and/or savings problems (as well as liquidity problems, which are not a "cost" from the economic viewpoint as liquidity is accounted as if additional cost were created) and various positive and/or negative economic, financial, and social externalities associated with the pension system designs.