# I. **Introduction**

In some ways the elderly in Russia have not been particularly disadvantaged by the transition process. For example, a number of studies, e.g., the World Bank (1995) and (2000) show that the likelihood and the intensity of poverty of elderly-headed households have been similar to that of other groups. One-parent families with children are far more likely to be poor, and they have much lower average incomes than do the elderly. (Braithwaite (1995)). However, the experience of the elderly has certainly been difficult, and in many ways, they have often been among the most vulnerable and those least able to cope with all the changes that have taken place (see Lokshin and Yemtsov, 2000).

For example, in the period between 1992 and the economic crisis of 1998, more than half of the elderly households in Russia experienced poverty for at least a brief period of time (Lokshin and Popkin, 1999). Furthermore, in the 1998 banking crisis, the elderly were more than twice as likely as others to lose their savings. Moreover, the size of the loss -- over 80 percent of the household's savings -- was also considerably larger than that experienced by other families.' Finally, while most of the elderly are not strictly poor, many have income levels only slightly above the poverty line.<sup>2</sup> About a third of Russian elderly households are lower income households which we define as being either poor or what we call near poor.<sup>3</sup> Thus, unlike the situation prior to reform -- when pension payments were stable and the elderly paid almost nothing for health care, housing, and transportation -- in the new economic order, they now face considerable uncertainty and often have difficulty making ends meet. If they have not recently been in poverty, many have been close to it. Moreover, they often face the likelihood of penury unless they can function effectively in the much more complex economy. However, according to Lokshin and Yemtsov (2000) urban pensioners are the demographic group least likely to have a response strategy for dealing with their new environment; In addition, macroeconomic volatility has made the timely payment of their pensions questionable.<sup>4</sup> At the same time, economic reform has made the prices of many basic services considerably higher. In sum, the living circumstances of many of the Russian elderly have become more complicated, often accompanied by lower incomes and by considerably shorter expected life spans.

While elderly households have experienced some income difficulties, they have also been the beneficiaries of a very large transfer of wealth. In Russia, as in most transition economies, housing was privatized, essentially under give-away terms (see Struyk and Kosareva, 1994).

> ' Based on analysis of the 1998-99 Russian Longitudinal Monitoring Study.

> 2 Analysis of Wave 4 (December 1995) of the Moscow Longitudinal Household survey reveals that 22 percent of elderly households are "near poor," i.e., with incomes less than 50 percent above the poverty line. Over 35 percent of single elderly households are near poor.

3 We define the "near poor" to be households with incomes between 100 to 150 percent of the poverty line a figure within the range of a number of poverty-oriented programs. For instance, in the US for the Food Stamp Program, eligible individuals have incomes 130 percent of the poverty guidelines; for the National School Lunch Program, there are two income thresholds: one is for individuals with incomes with incomes between 130 and 185 percent of the guideline; for the Low-Income Home Energy Assistance Program, individuals with incomes up to 150 percent of the poverty guidelines are eligible (Ways and Means Committee, Print WMCP: 105-7; 1998 _Green Book, U.S._ Government Printing Office.) 4 For example Bohlen (1999) shows that in 1998 pension payments were more than $3 billion in arrears.

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