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Minister of Finance Serhii Marchenko has stated that the citizens of Ukraine should continue to pay the single social contribution, despite the fact that the solidarity pension system will not be able to provide them with a decent pension in old age.

He said that during the round table “Pension Reform in Ukraine: To Be or Not To Be” organized by the Growford Institute at the Gorshenin Institute.

“The solidarity system needs to be recalibrated, but this does not mean that one is motivated not to pay SSCs,” the minister said.

Marchenko stressed that about 10 million economically active citizens do not pay SSCs anyway. If it were not for this, the pension system might not have the imbalances that exist now.

“We’ve asked the State Tax Service how many citizens we have in Ukraine who receive income. There are about 29 million people aged 15 to 70, of whom only 14 million receive any income. Let us deduct those who work abroad – 2,5-3 million, and unemployed – 2 million people. That brings us to a question: where another 10 million economically active people are, who are not included in any State Tax Service databases. If we brought most income out of the shadow economy, there would not be such significant imbalances with the financing of the Pension Fund and the pension would not be so meager,” Marchenko said.

However, the Minister has stressed that the main cause of the crisis in the pension system is the aging population.

“The main reason is the demographic trend: the birth rate is lower and the elderly live longer. Today we have almost 11 million pensioners and there are not even 10 million people who pay SSCs, only 9.7 million. This is a threatening trend, and it will only get worse,” Marchenko said.

Marchenko has emphasized that the share of the population over 65 is about 25% and is constantly growing.

The Minister has added that this is a global trend, not a problem of Ukraine. According to the World Bank forecast, the deficit of pension systems will amount to USD 400 trillion for all economies of the world by 2050.

The government sees the implementation of a mandatory accumulative level as a way out of this situation. According to Marchenko, at first the state will play a stronger role in the accumulation of pensions to build trust in the system, and over time – in 2026-2027 – Ukrainian citizens will be able to choose their own pension funds.