After the war in Ukraine concludes, a "second pension" system based on mandatory savings will be implemented. This will provide citizens with an additional income in retirement, enhancing their financial security and strengthening the economic stability of the country. Oksana Zholnovich, the Minister of Social Policy, discussed this in a comment to the publication "Novini Life".
The introduction of the second tier of the pension system involves creating a mandatory savings system that will supplement the existing solidarity pension system. This reform has been on the government's agenda for several years. The need for such changes is evident: the current solidarity system, where pensions are funded by contributions from working citizens, does not provide sufficient payouts for many retirees.
The reason for this is the demographic crisis, where the number of retirees significantly exceeds the number of working individuals. In light of this, the Ukrainian government is developing measures aimed at ensuring a decent pension income for future generations.
The savings pension system is a mechanism whereby each citizen is required to set aside a portion of their salary into a special account, which is then invested to generate income in the future. In other words, each worker independently builds a part of their pension by making regular contributions throughout their working life. This system operates successfully in many countries worldwide and has already demonstrated its effectiveness, especially in European and Asian nations.
Oksana Zholnovich stated that the government has already completed the legislative coordination at the working level for the introduction of the second tier of the pension system. She noted that the solidarity system will continue to function; however, it will be supplemented by mandatory savings pensions, providing retirees with additional income. The introduction of the savings system is planned to occur immediately after the war ends. According to the minister, this will help accelerate the stabilization of the country's economy and provide citizens with additional guarantees for the future.
Zholnovich highlighted that a mandatory savings system will be established. Legislation on this matter has already been coordinated at the working level. If the solidarity system begins operating in July of next year, the implementation of the mandatory savings system will start right after the war concludes. The main advantages of the new tier of the pension system are:
However, alongside these positive aspects, there are certain risks and challenges. Firstly, it is essential to establish a reliable infrastructure for managing savings funds, which requires a high level of transparency, effective government regulation, and prudent investment of resources. Secondly, the success of the savings system is directly linked to citizens' trust in the organizations managing their funds.
Additionally, on October 21, the media reported that some Ukrainians will not be able to retire at 60. In 2024, individuals need to have a minimum of 31 years of insurance experience, and this figure will increase until 2028. Those who lack the required experience have the option to purchase additional years.
Moreover, on October 17, the Pension Fund of Ukraine announced that some Ukrainians received a pension increase of 6,000 hryvnias. Consequently, the average pension in Ukraine has risen by 466.61 hryvnias.