Bìznes Inform (Jan 2024)
Financial Potential of the Solidarity Pension System of Ukraine and Ways to Improve It
Abstract
The solidarity pension system currently plays a major role in the functioning of the pension system of Ukraine. It is the first level of the domestic pension system that accounts for the main financial burden of pension payments to Ukrainian citizens. The aim of the scientific article is to assess the financial potential of the solidarity pension system of Ukraine, determine the impact of various factors on its condition and search for additional sources of financing pension payments for citizens of retirement age. The article pays special attention to the analysis of the challenges that society has received under martial law in the country, and their impact on the features of the financial provision of the pension sector. The results of the study show that the crisis in the national economy, as well as negative trends in the demographic sphere, significantly affected the financial condition of the main financial institution of the solidarity pension system – the Pension Fund of Ukraine (PFU). During the study period, the Pension Fund’s own financial resources are not enough to fulfill its obligations to Ukrainian pensioners, so there is a deficit of the PFU. It is determined that it is covered by the State Budget of Ukraine, as well as financial resources of international financial organizations. Attention is drawn to the fact that the minimum and average pensions of Ukrainian pensioners, although they tend to increase, are much lower than the incomes of citizens of retirement age in most European countries. In order to promote the diversification of sources of income for citizens of retirement age, to raise their level to European standards, it is necessary to introduce a mandatory accumulative pension system. It is noted that accumulative pension programs together with redistributive ones will contribute to strengthening the financial potential of the pension sector and increasing the incomes of Ukrainian pensioners.
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