MOSCOW, March 17 (Reuters) - A former finance minister of Russia urged policymakers on Thursday to maintain mandatory pension contributions and raise the retirement age to cure the country’s ailing pension system.

The finance ministry and the central bank are in talks about abolishing compulsory contributions to employees’ managed pension funds that had been aimed at sustaining the long-term health of the system.

Alexei Kudrin, who resigned as finance minister in 2011 after opposing greater spending on defence, called the pensions problem one of the most costly for the Russian budget and said the country’s economic development depended on how it is solved.

“There is not enough political will,” Kudrin told a conference on Russia’s pension system. “If we now abandon the mandatory pensions system, then the situation accumulation of the resources will be uncertain.”

Under the current system, the state divides the funds paid by employers for each employee into two parts. The larger goes straight to current state pension payments; the smaller to the employee’s individual pension saving account.

The second part, known as the mandatory accumulative pension, is usually invested in financial instruments by the state or by privately managed funds.

With Russia in recession and revenues dwindling after a slump in oil prices, there is not enough cash to pay current pensions.

For three straight years, the government has suspended transfers of money destined for the accumulative part of the system in order to help with current needs.

Kudrin said that raising the retirement age could help solve some of the cash flow issues. He said that even a gradual rise in the retirement age could bring an additional 500 billion roubles ($7.33 billion) in the third year after the rise begins.

In 10 years, the budget would receive two trillion roubles, or 1.2 percent of gross domestic product each year.

“In 15 years it will be three trillion roubles, 1.7 percent of GDP, which would further enable to balance the pension system,” Kudrin said.