In the World Bank's opinion, even with the most optimistic projections, the present pension scheme cannot liquidate the growing gap between the rising wages and pensions without additional reforms.
According to the basic scenario providing for the absence of reforms, the income replacement ratio (i.e., the average pension to average wage ratio) will drop from 33% in 2002 to 24.4-27.8% in 2030, the report says.
The World Bank's experts believe that in order to avoid a steep increase in the gap between wages and pensions, a drop in contribution rates must be accompanied by additional reforms, including the decision to gradually raise the pension age.
Annual state budget spending for resolving problems in the pension system will account for 0.25-0.55% of Russia's GDP in 2020 and 0.55-0.90% of GDP in 2030, says the World Bank's document.
The World Bank also recommends the abolition of benefits related to payments for the housing and utilities services in Russia.
According to the World Bank's report, its analysis shows that the abolition of benefits in payment for housing and utilities services will not be too great a strain for the majority of the present benefit recipients, while the program of housing subsidies will cater to those for whom the burden of housing and utilities expenses is too heavy.
At the same time, the report admits that, considering the controversial political purport of these reforms, the stage-by-stage reforming of the system of benefits cannot be ruled out.
In order to reduce political costs of the reforms, the process of abolishing benefits must be coordinated with other structural reforms, including wage rises in the state sector, and a rise in pensions and children's allowances, the report stresses.
