"In the next five, 10 or even 15 years this is a fundamental problem for our financial system ... and the highest risk, including for the budget and taxation," Alexei Kudrin told an economic forum in St. Petersburg.
The average monthly pension is about 26-27% of the average wage, or 2,700 rubles ($100) against 10,000 rubles (some $370), Kudrin said, which means that retirement entails a considerable deterioration in living standards.
"Under international labor standards, the figure must be at least 50%," he said.
Kudrin also said the Cabinet's move to cut VAT from 18% to 13% could only hamper efforts to find a solution to the problem.
"The government should work out an effective pension system for the long term in the near future to ensure the stability of the state and its financial system, given worsening demographic conditions," Kudrin said.
