Pension Arrears in Russia: The Story Behind the Figures

By the middle of the 1990s', the Russian pension system was suffering from an accumulation of arrears in payment of all pensions and benefits. The arrears damaged the welfare of a large segment of the population, leading to an increase in poverty and inequality, and also negatively impacted the health of recipients of pensions and benefits. 1 The problem of pension arrears seemed to be solved by the end of 1997. However, in 1998 the payment delays started again. The danger of a new round of pension arrears accumulation is still real, since the causes of the problem remain unsolved. The main point of this article is to analyse the overall reasons, which led to heavy arrears, and to review the situation across Russian regions regarding accumulation dynamics, the causes for accumulation, and measures implemented to resolve the situation. The article will conclude by considering how the lessons of the arrears crisis might be usedto structure a reform of the pension system.