The Russia government was, at time of going to press, considering the adoption of welfare reform proposal introducing top-up mandatory funding to the pay as you go state pension.

A month previously the government rejected what was regarded by some as a radical policy document closely modelled on the Chilean reform.

Evgeniy Yakushev, who heads the Moscow-based Pensions and Actuarial Consulting, says that the government is now considering a compromise document which will form its 'key-note' position, preceding legislation.

Yakushev, who helped develop the current document, says that there are two camps in the government, the older bureaucrats and the new radicals who have only been working in the government in the last two years.

The argument of the conservatives is that there has to be more accuracy and care taken with the reform, while the new people are putting only financial arguments about the positive effects on economic growth. It seems to be more important for them than providing a stable situation in the social security field."

He adds however that the two positions are, in reality, not very different but that they look at the situation from different angles and use different arguments.

"We will discuss the Chilean model and discuss our own reform, and find some compromise variant based on Russian traditions." Yakushev adds that one impediment to the Chilean model is that the sheer size of Russia throws up different obstacles.

"Everybody understands that the funding principle is very important for growth, that the PAYG does not have a future on its own and that we must combine both methods. It is now about proportions.""

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