The political economy of pension reform in Russia: Why partial privatization?

We begin with a brief history of social security policy in Russia both before and after the collapse of the Soviet Union. We describe the current pension scheme and present an analysis of the strengths and weaknesses of the model, with particular attention to the way in which it may disadvantage women and low-wage and informal sector workers. The reasons why Russia is in the process of implementing a social security scheme based largely on a model proposed by the World Bank is also explored. We argue that the decision reflects the effects of both internal and external economic pressures as well as cultural diffusion via the network of neo-liberal economists and pension experts associated with international financial institutions, most notably the World Bank. We conclude with a discussion of how we would restructure the Russian scheme making greater use of the notional defined contribution (NDC) model.