One of the important tasks of the state is to provide for its citizens. This issue is especially relevant for people who, due to their age, can no longer support themselves. Older generations are completely dependent on the functioning of the pension system, its effectiveness determines the standard of living.
The legacy of the domestic system
The pension system of the Russian Federation began its development after the collapse of the Soviet Union. Having a difficult legacy, providing pensioners required fundamental changes. The USSR used a joint pension system. Within its framework, able-bodied citizens ensured the payment of pensions to older generations.
This distribution can be effective provided that the working part of the population is significantly superior to disabled citizens. Russian realities dictate the opposite trend - the number of pensioners per worker is growing. If we add to this the inflation indexation of pensions, the load on the pension fund will be enormous. Solving the issue through additional infusions from the budget is the patching of holes that will form again. Therefore, the only way is to carry out deep systemic reforms.
Start of Reform: NPF
The main objective of pension reforms is to translate pension payments into a personalized form. If everyone begins to accumulate funds for their own needs in the future, the deficit of the pension fund will be avoided. The difficulty was that current tax revenues needed to be spent on providing current retirees. Therefore, it is only possible to reform the system in stages.
The first stage of the reform took place from 1992 to 1997. The primary goal of the initial changes was to create an alternative to state pensions. During this period, a legal framework was prepared for the activities of non-state pension funds (NPFs), which allowed the Russians to create their own savings for the future. Despite the 1998 crisis, the new structures were able to withstand the onslaught of adverse circumstances.
