A decision must be taken on the course of pension reform in Russia by the end of 2012, Prime Minister Dmitry Medvedev said on Thursday at a government meeting.

"This work will involve a wide strategy debate on pension reform, the project for which is ready and already published. We need to discuss it and take the necessary decisions by the end of the year," he added.

Social welfare program remain a funding priority for Russia's budget next year, he stressed.

"The budget's priorities remain as before - these are of course our social obligations of the state to its citizens, those obligations which we took on ourselves, modernization of the econom, infrastructure, and the social sphere interests of our people" he said.

Medvedev's comments come a day after President Vladimir Putin publicly rebuked the government for failing to include budget reform calculations in the 2013-15 budget.

Russia faces a looming funding crisis for its pension system, with an aging population and falling number of workers to support more retirees.

Pension reform has been a sensitive issue, with strong public opposition to a raising of the retirement age. The government has significantly raised pension payments in the last few years.