The retirement age, raising the tax “for all”: how to change the lives of seniors in 2017

Ukrainian pensioners are the poorest in Europe – the minimum pension currently stands at 1247 UAH, and by the end of the year it will increase by 100 hryvnias. For example, Belarusians are “retired” receive no less than 2889 hryvnia (converted from Belarusian rubles), and the Russians – from 3,870 USD. Despite the meager pensions, the Pension Fund is desperately short of money – the deficit last year reached 145 billion, and this year, according to the budget, will be at 141 billion.

There are several reasons for low pensions in Ukraine: a small salary, and a complicated demographic situation and the problems in the pension system that has long needed to be reformed. The Cabinet of Ministers promised to correct the situation and are already preparing radical changes that touch every Ukrainian. The website “Segodnia” figured out why the Ukrainians get a small pension and how it can change the situation in 2017.

Where does the money for pensions and why are they missing?

Solidarity pension system, which operates in Ukraine, involves the so-called “contract of generations”. Working Ukrainians pay social contribution on which pensioners live. It is assumed that their money Ukrainians still “compensate” when I retire, they will also contain working Ukrainians contributions.

At the moment solidarity system worldwide is in crisis. The number of pensioners increases and the number of employees is reduced. For example, in Ukraine 10 employees comprise 11 seniors. According to estimates of the Institute of demography and social studies, by 2050, this ratio will become even more critical – working 10 will contain 15 seniors.

Photo: archive

In the solidarity system in Ukrainian, there are also “individual problems”. Social security contributions pay not all working. According to the Ministry of social policy, in Ukraine there are 16 million people, and the Pension Fund contributions are paid only 10 million. There are categories that can contributions are not to pay, for example, farmers, notaries, Ukrainians employed in the service sector and so on.

Another problem is low wages. Size social contribution – 22% of salary (in 2015, the rate was at 37%, but from January of last year it reduced) and the lower salaries of Ukrainians, the less money in retirement. Many Ukrainians officially earn the minimum salary – about 40%. The second part of the salaries paid in “envelopes” and taxes are not deducted from it. The decision to raise the minimum wage will add to the “piggy Bank” Retirement Fund of about $ 15 billion hryvnia, but the situation will change is insignificant.

Senior researcher of the Institute of demography and social studies Lydia Tkachenko’m sure the problem of low pensions is the consequence of ustalosti of economy of Ukraine. Low salaries may not be high pension. Thus, according to scientist, the “backwardness” of the Ukrainian economy can be seen even in the structure of employment – every fourth Ukrainian (3.5 million people) works in sales. Something produced only 2.5 million Ukrainians. In this case, and in the production has its problems – developed economies are engaged in the processing, and Ukraine most often, the expert said, is engaged in the extraction of raw materials.

In addition, experts say, the current pension system in Ukraine does not meet the main criterion of fairness. So, the average pension of judges – more than 20 thousand hryvnia, people’s deputies – more than 15 thousand, at the same time, the average pension in the country – 1850 UAH, and more than a million pensioners receive less than 1600 hryvnias. In addition, pensioners who previously retired receive less money. In 2008, the ratio of length (a measure that is taken into consideration at calculation of pensions) increased from 1 to 1.35, the old pensions are not counted, and new steel assign to the new indicator.

The Pension Fund deficit has to be compensated by the state budget. “11% of GDP goes to pensions, subsidies. The money was supposed to be focused on the development of education, roads, medicine, infrastructure. And we have budget to take away all the money, where there is so little to just our seniors to keep on that miserable level, which is today,” – commented on the situation in the Fund, the Minister sotspolitiki Andrey Reva.

That government offers

To enter the second tier of the pension system. On the launch of the funded pension system in Ukraine has been discussed for several years, but the final decision has not been made. Funded pension allows Ukrainians to “collect old” with each paycheck – money accumulated on a special account and used only after retirement. However, in the Pension Fund are confident that in 2017 the cumulative level and not work. But some experts believe that at the moment to start it in Ukraine does not – that the savings are not “ate” inflation, they need to invest in the economy. And with a difficult economic situation is difficult to guarantee the preservation of savings.

Lydia Tkachenko says: to funded pension actually contributed to the welfare of Ukrainians, savings need to collect about 40 years. Minister Andriy Reva is sure: no one can guarantee that nothing will happen to the pensions of Ukrainians.

Photo: archive

“I know that we had a huge number of different financial institutions even 20 years ago. Do you remember those financial structures that existed 20 years ago and proposed pension program? I remember having a good memory. So, I’m not one of them now can not see. Kind of like me after 10 years of retirement to go. If I had moved and started to cooperate with them, I would have had nothing,” says Andriy Reva.

To oblige all to pay social contributions. As told in an interview “Segodnia” the Deputy Chairman of the Pension Fund Mykola Shambir, at this point in the institution to discuss the possibility to oblige all working Ukrainians to pay SST. From the first of January this solution is already partially embodied in the life of individual entrepreneurs are obliged to pay contributions even in the absence of income.

Raise the retirement age for those who “worked little”. We discuss the possibility to increase the retirement age for those Ukrainians who lack insurance experience. Recall, at this point men for old-age pension, you must work at least 35 years, and women 30. Those who, for example, lacks two years of service, will have to retire not at 60 and 62.

“Why should he have the same retirement benefits as those who honestly sticks? How is it better? The fact that he was the most cunning? What’s the problem? So if we have people who retire before the age of the one who all his life thought and not strained should probably come later. And I think that’s fair. If one 35 years worked, then great. The second coming – “And I am 5 years worked, the rest is either over worked or didn’t work at all”. Why they have to pay equal pension? Is that fair? Then you will be interested all my life to work and pay if you know that he will still get the same thing as you?”, – said in an interview “Segodnia” Andrew Reva.

Such a system is used, for example, in Russia – Russians with little experience retire five years later.

At the same time, Lydia Tkachenko is sure to raise the retirement age stands for all Ukrainians. According to international standards, in any country, regardless of the demographic situation, the retirement age can be raised to 65 years. This will reduce the number of pensioners per one million people, in addition, increase the number of employees.

Main countries demographer Ella Libanova believes that to raise the retirement age. Many Ukrainians until retirement not just survive. So, the likelihood of Ukrainian men die between the ages of 20 to 60 years – 40%, while in Switzerland not live to 60 years, only 8% of men.

On average, men live in retirement (after 60 years) 14.8 years and women 19.9 years. In this regard, I’m sure a scientist, and to raise the retirement age for men is impossible. “If we have a retirement age of 60 years, our men have the chance to live in retirement for almost 15 years. If we retirement age will raise (men – approx.ed.) to 65 years, they will remain to live only 12 years. It is too little, if we assume that 40 years, they work somewhere and pay the fees, that’s just cruel. In women, the situation is better, they had all the demographic bases to raise the retirement age to 60 years”, says Ella Libanova.

How to increase pensions in 2017

In 2017 in addition to the indexation of pensions by 10.1% (or 100 UAH), which is provided for in the draft budget, the Ukrainians are “modernizing”. Pension plan to increase by an average of 300 hryvnia five million Ukrainians, says the Vice-Prime Minister Pavlo Rozenko.”Details can not tell, because the decision is still pending. But what is the pension modernization? This is, in fact, a solution to the underlying problem, when the newly appointed pension much higher pensions of older pensioners. Modernity involves bring the “old pension” to the new. How this will be done immediately or in stages – this issue is still being discussed”, – said Mykola Shambir.

However, as the official said, to modernize the pension will by changing the average wage, which is taken into account when calculating pensions.