A draft law on the transition to the accumulative pension system was submitted to the Verkhovna Rada

Author:
Sofiia Telishevska
Date:

The draft law No. 9212 on the transition to the accumulative pension system was registered in the Verkhovna Rada (Ukrainian Parliament). The document provides that all people under the age of 55 who have a job will participate in the accumulation system, and the employer is obliged to pay pension contributions for the benefit of subordinates.

Contributions to the pension fund (PF) will come from both the employer and the state on a parity basis.

The initiators of the draft law were a group of 50 MPs headed by the head of the parliamentary faction "Servant of the People" David Arakhamia.

According to the project, employers will pay 1% in 2023, 1.5% in 2024, 2% in 2025 of the amount of employeesʼ wages, and co-financing will come from the state budget on a parity basis.

At the same time, the amount of the single social contribution (SSC), which is paid by the employer, remains unchanged, the cumulative contribution is included in the composition of the SSC.

If the employee wishes, the amount of his independent contributions can be increased. The state will finance such contributions within 3% of the average salary by type of economic activity in the economy. The same conditions of state co-financing are offered for participation in the system for individual entrepreneurs and self-employed persons, which is voluntary.

Until 2025, accumulated money will accumulate in the pension fund, and from 2026, a person will be able to choose independently where to accumulate money — in a state or non-state PF.

Accumulations are protected from depreciation and inflationary effects by investing them in mostly conservative financial instruments.

In case of death, ownership of pension savings passes to the heirs.

Currently, a solidarity pension system operates in Ukraine, under which employers pay contributions per employee to the Pension Fund of Ukraine (PFU). These funds are used to pay pensions to current retirees.

  • In 2020, the Prime Minister of Ukraine Denys Shmyhal predicted that by 2035, there will be twice as many pensioners in Ukraine as the working population, and the state will not be able to pay them pensions.