German Gref said the increase in income differentiation between high and low-waged workers is one of the main challenges currently facing Russia.
The minister also said the disproportion between average pensions and wages, the slow growth in the manufacturing industry and low diversification of the economy were important issues for Russia.
The Russian minister stated that the government plans to raise pensions to the minimum subsistence level by the end of 2009.
German Gref called for the development of legislation to finalize the reform process for the pension system in Russia.
"We need to improve Russia's pension system, otherwise the country will face a funding shortfall and a decline in replacement ratio", the minister said.
The new pension system launched in 2002, aims to abolish a pay-as-you-go (PAYG) principle, based on pension benefits, and to transfer the burden of pension provision from the state by introducing a cumulative part of a pension, financed by employers.
The system also offers Russians the opportunity to independently choose a management company as a trustee for his or her pension savings. Currently only 4% of Russian workers have transferred the accumulative part of their pension from the State Pension Fund to private management companies.
The average subsistence level in Russia for 2007 is 4,414 rubles ($163) a month. The minimum monthly wage has been set at 2,000 rubles ($76), but 10% of public-sector workers live on wages below that level. The average pension in Russia is 2,726 rubles (about $103) per month.
