State Treasury Service almost ready to introduce funded pension system in Ukraine

Head of the State Treasury Service of Ukraine Tetiana Sliuz says the agency is technically "almost ready" to introduce a funded pension system in Ukraine, which assumes that every working citizen will be able to make payments to their personal retirement account to have additional funds from contributions made after reaching retirement age.

"It's a very interesting idea regarding the funded system. And we are technically ready on certain points. We have discussed the issue with lawmakers, and we are ready to some extent," she told journalists on March 4, following the presentation of the agency's 2019 report.

Read alsoUkraine's Cabinet to audit Pension Fund in 2020

She added that the State Treasury Service in 2019 allocated UAH 118.7 billion (US$4.8 billion) in loans to the Pension Fund of Ukraine (PFU) for covering temporary cash gaps related to pension payments, of which the Fund paid off UAH 117.6 billion (US$4.7 billion).

According to Sliuz, the PFU's average monthly expenditure is estimated at about UAH 36 billion (US$1.4 billion), whereas it was nearly UAH 9 billion (US$360.9 million) a decade ago.

As UNIAN reported, Sliuz earlier said that one of the Service's challenges remains the Pension Fund's arrears for loans to cover temporary cash gaps, which were formed in 2007-2014, as well as in 2019. As of January 1, 2020, the arrears totaled UAH 49.2 billion (US1.97 billion).

UNIAN memo. The solidarity pension system currently in force in Ukraine stipulates that deductions to the Pension Fund are being paid from the salaries of each officially working person, while a pensionable service period is being accrued. In turn, the PFU pays retirement benefits to pensioners from the accumulated funds.

The funded system means that every working citizen can accumulate funds on his/her personal retirement account. After reaching retirement age, they will be able to receive additional payments from contributions made.

In late March, the National Securities and Stock Market Commission finalized drafting a bill on compulsory funded pension provision, which introduces a second-tier pension system in Ukraine. However, the Verkhovna Rada, Ukraine's parliament, of the previous convocation failed to pass the draft law.