1. RETIREMENT STRATEGIES OF RUSSIANS (2005-2010) Olga Kuzina Higher School of Economics, Moscow

2. Retirement strategies Do people have an idea about the amount of their future state pension? Do they think that their state pension will be enough to make their ends meet? Do they expect to have additional sources of income? What are these sources? How many do make any financial provisions for their retirement? From which sources do current pensioners draw their incomes? Do people know anything about the state program of co-financing the retirement savings? What do people think about this program? How many do participate? How are people going to ensure that their incomes will be sufficient to provide them an acceptable level of living?

3. % Male45 Female55 100 18-24 14 25-34 20 35-44 17 45-59 29 60+ 20 100 All-Russian surveys N=1600 Sample error - 3,4% Data description Waves 2005 – ZIRCON 2007 – НАФИ 2009 - HSE 2010 – HSE In all waves the same question wording and sampling methodology was used

4. RETIREMENT INCOME STRATEGIES OF PEOPLE OF WORKING AGE

5. When you will retire do you think that the level of your pension will be enough to live on? % of people of working age RETIREMENT INCOME EXPECTATIONS – VERY FEW ARE SURE THAT THEY WILL BE ABLE TO LIVE ON THE STATE PENSION

6. The level of retirement confidence in the USA

7. RETIREMENT INCOME EXPECTATIONS DO NOT DIFFER ACROSS AGE GROUPS 25+ When you will retire do you think that the level of your pension will be enough to live on? % in age groups, 2010

8. RETIREMENT INCOME EXPECTATIONS DO NOT DIFFER ACROSS QUINTILE INCOME GROUPS When you will retire do you think that the level of your pension will be enough to live on? % in quintile income groups, 2010

9. Do you expect that apart from the state pension you will receive additional income from other sources? % of people of working age RETIREMENT INCOME EXPECTATIONS – EVERY SECOND EXPECT TO RECEIVE INCOMES FROM OTHER SOURCES

10. TYPES OF ADDITIONAL INCOME SOURCES IN RETIREMENT, % OF THOSE WHO EXPECT TO HAVE INCOMES FROM OTHER SOURCES IN RETIREMENT 2005200720092010 Continue to work in my profession 41425248 Continue to work, will find a job to be able to do 33344039 My spouse will continue working in retirement 58158 Expect that my children will help me 12182021 Hope to get help from charity foundations 0,50,7 0,5 Self-provision 1514138 Consider moving to a smaller (cheaper) apartment (house) to use the difference for consumption as the need arises 0,6220,7 Receive income for renting out my real estate property 2334 Plan to use my savings 5958 Plan to receive a supplementary pension from the private pension fund or life insurance policy 3435 Expect to receive inheritance 2343 Do not know now, will think about it later 13146 Something else 1112 Total (over 100% because this question allowed multiple choice answers) 133153165161 N 602670553582

11. AGGREGATIVE ANSWERS, % OF THOSE WHO EXPECT TO HAVE INCOMES FROM OTHER SOURCES IN RETIREMENT 2005200720092010 Work 72738381 Help 12182021 Financial tools 9141115 Self-provision 1514138 Real estate 3444 Do not know 13146 Other 1112 N 602670553582

12. TYPES OF ADDITIONAL INCOME SOURCES IN RETIREMENT, % OF PEOPLE OF WORKING AGE 2005200720092010 Work 42 4143 Help 710 11 Financial tools 5858 Self-provision 9864 Real estate 2222 Do not know what these sources will be 8837 Other 1101 Do not expect to have additional incomes in retirement 23243629 Do not know if will have additional incomes in retirement 19 1518 N 1090116811281095

13. RETIREMENT INCOME STRATEGIES OF PENSIONERS

14. TWO THIRDS OF PENSIONERS DO NOT HAVE ADDITIONAL SOURCES OF INCOMES, % OF ALL PENSIONERS 2005200720092010 Have additional incomes29383233 Do not have additional incomes 6969576766 N392411468503

15. TYPES OF ADDITIONAL INCOMES IN RETIREMENT, % OF ALL PENSIONERS 2005200720092010 Work 10182226 Help 81284 Financial tools 1121 Self-provision 131244 Real estate 0001 Other 1203 No additional income 6969576766 Difficult to say 2511 N 383411468503 Over 100% because this question allowed multiple choice answers

16. KNOWLEDGE ON THE STATE PROGRAM OF CO-FINANCING THE RETIREMENT SAVINGS

17. THE MAJORITY OF PEOPLE OF WORKING AGE KNOW THAT THEY CAN VOLUNTARY CONTRIBUTE TO THEIR PENSIONS BY ALLOCATING MONEY TO PRIVATE PENSION FUNDS BUT VERY FEW DO THAT 20092010 Yes, I do it88 Yes, I would like to do it1612 No, I might wish to do it but I know very little about it 2518 No, I do not5062 N779851 Do you allocate (or plan to do it) money to a private pension fund in order to get a supplementary pension in retirement? % of those who know about this possibility Do you know that you can voluntary contribute to your pension by allocating money to a private pension fund in order to get a supplementary pension in retirement? % working age people, N= 1098, 2010

18. 20092010 Do not trust private pension funds5860 No nothing about private pension funds 65 Do not have enough information how to choose a pension fund properly 33 Do not have spare cash for it 3137 Do not know for sure my spending and earnings in future 1311 Other 57 Difficult to say 20 N 392525 Why do not you want to contribute money to a private pension fund to get a supplementary pension? % of those who do not want to deal with private pension funds, multiple choice with not mоre than 2 answers LACK OF TRUST RATHER THAN LACK OF MONEY OR INFORMATION MAKE PEOPLE REFUSE FROM USING PRIVATE PENSION FUNDS

19. AWARENESS OF THE STATE PROGRAM OF CO-FINANCING THE RETIREMENT SAVINGS AND WILLINGNESS TO PARTICIPATE IN IT

20. THE MAJORITY OF PEOPLE KNOW ABOUT THE STATE PROGRAM OF CO- FINANCING THE RETIREMENT SAVINGS BUT ONLY 27% CAN SAY THAT THEY KNOW IT WELL Starting in 2009 it is possible to get a 100% supplement to your voluntary contributions to supplementary pensions if you contribute from 2000 up to 12000 rubles. Do you know about it? %, N=1098, 2010 73

21. 21 What is your attitude towards this program? %, N=1223, 2010 EVERY SECOND OF THOSE WHO ARE ELIGIBLE FOR THIS PROGRAM APPRECIATE IT HIGHLY

22. 22 Are you going to take part in this program? %, N=1223, 2010 NEVERTHELESS ONLY 22% ARE READY TO TAKE PART IN THIS PROGRAM

23. 23 THE DYNAMICS OF ATTITUDES TOWARDS THE PROGRAM AND WILLINGNESS TO PARTICIPATE – THE DECREASE OF OPTIMISM IN 2010, % 20092010 AttitudesWillingnessAttitudesWillingness Positive/yes 146 4 Rather positive/ rather yes 41243618 Rather negative/ rather no 15271740 Negative/ no 522723 Difficult to say 25232616 N 1227 1223 Balance of positive estimations over negative ones, points 22-1817-30

24. 24 VERY FEW REPORT THAT THEY HAVE STRATEGIC GOALS AND EVEN LESS - STRATEGIES TO ACHIEVE THESE GOALS %, N=1600, 2010

25. 25 DISCUSSION It seems that in the life-long perspective Russians do not smooth consumption as the Life-Cycle Model (Modigliani) predicts. Why do Russians prefer work after retirement and not savings? The idea of rationality is conceptualized not as a given inborn property of individuals but rather as a competence acquired through socialization in the presence of the particular type of social institutions: based on personal or impersonal trust. The lack of impersonal trust in financial institutions makes long- term financial savings for retirement impossible. That is why in life-cycle terms pensioners may compensate the loss of incomes by continuing to work after retirement or through sharing incomes in an extended family. Income smoothing rather than consumption smoothing. Could it be generalised to other institutional frameworks?