Pensions will be reduced and the retirement age will rise: the expert explained how to save the pension system of Ukraine

In Ukraine this month, the government presents its pension reform. At the moment, judging by the statements of the Ministry of social policy, we are talking primarily about changes to the solidarity system (all workers pay contributions and the money is redistributed between the retirees). However, as stated by the RPR expert, head of the public Council at Pension Fund of Ukraine Galina Timchenko, without the introduction of the funded pillar (every Ukrainian defers portion of salary to the individual account), the situation will only get worse.

“We are talking about that “solidary” (solidary pension system – approx.ed.) instead of 60% (from the base for calculating pensions) will ensure that from 2018, only 35% – at once. This is not the last reduction. The government (no matter how it good or not) will be forced to reduce the coefficient or significantly raise the retirement age. This means, like bad nor was contributory pension….now we are on the other. The level of pensions will fall and need something to replace”, – the expert writes on his page in the social network.

According to Galina Timchenko, if you run a cumulative level, the size of payments for the Ukrainians in retirement can be significantly increased, and the situation in the pension system stabiliziruemost.

However, the opinion Tretyakova not shared by all her colleagues. Senior researcher of the Institute of demography and social studies Lydia Tkachenko is sure: at the moment it makes no sense to start a savings system.

“And in the Memorandum, which was signed by our leaders of the country with the IMF says that Ukraine is going to refrain from cumulative level. The law second level registered for a long time, but there are no dates. The bills were dates, but the bills remained bills. There were allegations that this year’s cumulative level starts, no one will remember. I’m not saying that there should be preparatory work, established infrastructure, should be generated a cumulative level,” says Lydia Tkachenko.

According to the expert, Ukraine does not to run the mandatory funded tier of the pension system, and instead need to think about how to develop non-state pension funds. “The problem of the second level, why does the IMF not recommend to enter it, that the state did not take on additional responsibilities,” says Tkachenko. If the second level is entered, the state accumulation Fund would not only have to accumulate funds, but to invest them into the economy in order to increase savings of the Ukrainians, or simply “eaten” by inflation.