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Minister of Social Policy Maryna Lazebna specified the main parameters of the future funded pension system proposed by the government.

She reported on the work of the Ministry at a roundtable on “Pension Reform in Ukraine: To Be or Not to Be” organized by the Growford Institute at the Gorshenin Institute.

The Ministry of Social Affairs proposes to introduce mandatory savings for all employees under the age of 50, and voluntary savings for those over the age of 50.

Contributions will tentatively be 2% from the employer and 2% from the employee (but may be 1% and 1%), and the Ministry of Social Affairs insists that this be done by reducing existing taxes and fees.

The money from the savings will be put into pension funds, private or state, which will invest them.

A person can receive payments from savings in several ways. The base is a 10-year payment each month. There will also be a possibility of a one-time payment or making payments for life.

The government is going to implement the accumulative level of the pension system on the basis of existing bodies, without creating additional institutions.

Lazebna stressed that the introduction of funded pension system was inevitable. “The question is not whether to be or not to be, the question is in consensus. If everyone unites, the system will be. Because people need to be told the truth, they need to be shown prospects,” Lazebna said.

According to her, the future of the pension system without reform will be sad.

“Since 2004, a mandatory state pension insurance has been introduced in Ukraine. That is, the more you work, the bigger your pension is. Indeed, for about five years we had very good results. The pension was somewhere between 57-60% of earnings, which is a very good figure. Today we have 30%. It is not enough. But the prospect is 20%,” Lazebna said. 

At the same time, the Minister emphasized that the introduction of a funded pension system did not mean the abandonment of solidarity when workers keep pensioners.

“The solidarity system will always be in the country,” Lazebna stressed.