A radical overhaul of Russia's creaking pension system is set to release billions of dollars into the country's debt and equity markets over the next few years and will stimulate dramatic growth of the financial industry.
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Russia's ageing population threatens to overwhelm a system whose coffers were left bare after the collapse of the Soviet Union. Average monthly pensions are worth just $50, $10 less than the official subsistence income. And 30% of the population lives below the poverty line.
Other countries have been accumulating substantial pension savings and investments, both public and private, for decades but Russia still funds them directly from the budget and partly from a state-run pension fund financed through a unified social tax paid by companies.
Starting this month, a proportion of social tax contributions is to be farmed out and managed by independent non-state pension funds. In 2004 companies themselves will be obliged to offer workers professional pension schemes as well.