The author writes that modern day Russia inherited its pension system, both the low retirement age and scarce budget, from the Soviet Union. However, the unpopular decision to raise the retirement age "may create more serious problems than it solves." One major point of contention over the reform is that life expectancy for Russian men averages 67 years, which means that raising the pension age to 65 "is akin to issuing men an actuarial death sentence." Although the reform is aimed at lessening the strain on the public budget, state subsidies to the Russian pension fund total "less than 10 percent of the total consolidated budget." The real challenge Russia faces, the author writes, is that Russia has an aging population, and Moscow needs to acknowledge this. "[I]f the pension fund were to remain sustainable using this approach alone, the retirement age would have to increase by another five years in 2028." Improving the management of the pension fund would be a more sustainable approach to solving the problem, the author argues. However, "Russia’s crony-capitalist economic model requires an ever-increasing volume of funds to be burned on lavish mega-projects that generate huge profits for a dozen families close to the Kremlin."

Read the full article at Project Syndicate.

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