Pension strategies of unwilling joining pension plans: an issue of a rational choice

Abstract

This article presents the analysis of Russian «silencers» participation in mandatory pension accumulation. The paper examines the peculiarities of pension strategies of the Russians in forming a funded pension with automatic enrolment through an interdisciplinary approach and methods of statistical data analysis. Based on the achievements of economic science of neoclassical, institutional and behavioral directions, the author argues that the use of such methodological prerequisites as rationality and irrationality of individuals leads to an oversimplification of the relationship between behavioral strategies and their results. The purpose of this article is to analyze the features of “silent” pension strategies through the prism of irrationality and rationality and to assess the consequences of passive participation strategy in the Russian pension process in the 2000s. The article examines the works of foreign and Russian scientists on pension programs with automatic enrolment, while the factual base is presented by materials of the Federal state statistics service and Russian Pension Fund. The article provides an overview of prior works on аutomatic enrolment to retirement plans in the United States and other foreign countries: it reveals critical remarks on the practice of automatic enrolment and reveals the problems of using automatic enrolment in the pension process. The author argues that the economic behavior of the Russian «silent» is primarily due to the specifics of institutional environment as well as the level of trust in the state and financial institutions. It has been established that irrationality and financial illiteracy are not always the primary causes of “silent accession” strategy. The conclusions and proposals of the work can be used for further research in pension strategies and the development of pension policy in Russia