Pension Fund Of Ukraine

The Pension Fund of Ukraine is a central executive body that manages a solidarity system of compulsory state pension provision, collects, accumulates and records insurance premiums, allocates pensions and prepares documents for their payment, provides timely and full financing and payment pensions, burial assistance and other social benefits.

Legislative status

According to the law, all pension payments are made from the Pension Fund of Ukraine. The Pension Fund of Ukraine monitors the target use of funds that go to payouts. The Pension Fund of Ukraine shall, in accordance with the established procedure, submit proposals to the Ministry of Labor and Social Policy of Ukraine on the issues of formation of the state pension policy and control the implementation of official legislative acts.

Activities of the Pension Fund of Ukraine are subordinated and coordinated by the Cabinet of Ministers of Ukraine through the Ministry of Social Policy of Ukraine.

Pension reform

The implementation of pension reform proceeds through the gradual introduction of a three-tier pension system:

* The first tier is a Solidarity system
* The send tier is Mandatory Accumulation System
* The third tier is Voluntary Non-State Pension Savings System

The main objectives of the pension reform are:

* to raise the living standards of pensioners;
* to establish the dependence of the size of pensions on the numbers such as earnings and length of service;
* to ensure the financial stability of the pension system;
* to encourage citizens to save money on old age;
* to create a more efficient and effective system of administrative management in pension provision.

The three-tier pension system will allow the distribution of the three components of the risk associated with changes in the demographic situation (which is more sensitive to the solidarity system) and fluctuations in the economy and in the capital market (which is more experienced by the accumulation system). Such risk-republican sharing will make the pension system more financially balanced and sustainable, which will protect employees from lowering the total income after retirement.

Chronology

* December 1990. The Ukrainian Republican Department of the Pension Fund was established.
* February 1991. The regional authorities of the Pension Fund have been formed.
* December 1991. The pensions were financed from the Pension Fund, and not from the state budget for the first time.
* January 1992. A Pension Fund of Ukraine was created. It was formed on the basis of the Ukrainian Republican branch of the Pension Fund of Ukraine.  The administrations were established in the Autonomous Republic of Crimea, oblasts, cities of Kyiv and Sevastopol, approved the Pension Fund Regulations. The social insurance contribution rate was set at 61% of the wage fund.
* April 1992. The contribution rate for insurance of employer is reduced to 37% of individual salary
* October1992. The administrative liability has been introduced for non-payment of insurance premiums to the Pension Fund.
* July 1993. The basis for calculating contributions to the Pension Fund was arranged.
* December 1993. The Joint-Stock Post-Pension Bank Aval was created. Its aims were creation conditions for reducing the period of circulation of pension funds and ensuring their timely payment with the participation of the Pension Fund. 
* June 1994. A new Act of the Pension Fund of Ukraine was approved. The rayon and city departments of the Pension Fund were created.
* October 1995. The obligatory registration was introduced for payers of insurance contributions to the Pension Fund.
* February 1996. The payment of insurance premiums was attached to the time of salary payment.
* March 1996. The Directories was created at the Regional Administrations of the Foundation.
* April 1997. A work of creation of legislation on Pension Reform was begun.
* July 1997. The Law of Ukraine "On the Collection for Compulsory State Pension Insurance" was adopted. The contribution rate was set at 32% of individual salary.
* September 1997. The Cabinet of Ministers of Ukraine allowed the agricultural commodity producer to repay the debt of payment of the compulsory state pension insurance by-products of own production.
* January 1998. The President’s Decree introduced the bank’s judicial responsibility for the payment of wages without deductions to the Pension Fund.
* April 1998. The President’s Decree approved the Basic Directions of Reforming Pension Provision.
* May 1998. It was planned to create a plan for phased introduction (1998-2000) of automated personalized accounting of information in the system of compulsory State pension insurance.
* July 1998. With the consent of pensioners, the payments of pensions were introduced through institutions of banks.
* July 1998. A minimum was set on the amount of income for paying a contribution to the Pension Fund.
* August 1998. A new special department of the Pension Fund was formed. Its functions related to the sale of goods (services), property, property rights for the collection of compulsory state pension insurance.
* October 1998. In the Law of Ukraine "On the Collection for Compulsory State Pension Insurance" the contribution rates were introduced:
** from the operation on buying and selling currencies;
** jewelry;
** alienation of cars
* The 1999 year. An experiment has been launched to set the pensions by the Pension Fund authorities in the Lviv region. In five rayons of Lviv Oblast, a pilot implementation of personalized accounting information in the system of compulsory state pension insurance was conducted.
* September 2000 year. The arrears of payment of pensions were repaid
* October 2000 year. The implementation of personalized accounting information was complete all over Ukraine
* January 2001. The Pension Fund's Experiment on pensions has been extended to Crimea, Dnipropetrovsk, Donetsk, Zakarpattia, Kyiv, Lviv, Nikolayev, Poltava, Kharkiv

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