Ukraine’s pen­sion sys­tem of­fers worst of both worlds: high taxes and low ben­e­fits

Kyiv Post Legal Quarterly - - Contents - By Olena Savchuk

Ukraine’s state pen­sion sys­tem not only over­bur­dens the tax sys­tem – it also fails to of­fer re­tired Ukraini­ans a de­cent life af­ter they leave the work­force.

Amid the on­go­ing dis­cus­sions on the fi­nal version of tax re­form, there is con­sen­sus on low­er­ing the uni­fied so­cial tax on salaries from 41 to 20 per­cent to avoid wide­spread eva­sion. That’s the tax that feeds the ever-hun­gry pen­sion fund.

“Of course this step will lead to a deficit of nearly Hr 100 bil­lion in con­tri­bu­tions to the pen­sion fund. We plan to bal­ance it with com­pen­satory steps and a para­met­ric re­form of the pen­sion sys­tem in the near­est fu­ture,” Fi­nance Min­is­ter Natalie Jaresko wrote re­cently in an op-ed for Ukrainian on­line news­pa­per Ukrain­ska Pravda.

Twelve mil­lion re­tired Ukraini­ans – a quar­ter of the na­tion's pop­u­la­tion – re­ceive pen­sions, even though they are not high enough to live on.

Mea­ger pen­sions leave many re­tirees in poverty, forc­ing them to work to sur­vive. (Volodymyr Petrov)

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