How to ensure a decent old age
Back in 2003, Ukraine passed the Law "On Non-State Pension Provision" and the Law "On Compulsory State Pension Insurance," which described the three-tier pension system. These laws provided for introducing a mandatory savings system, which is a common practice in modern developed countries. However, this system hasn't yet fully worked, because today only two levels of the pension system are active out of three: solidarity and voluntary-accumulative.
As practice has shown, the first level no longer justifies itself. The reason for this is the demographic situation in Ukraine, which is only deteriorating from year to year. The solidarity system can only work perfectly if the contributions to the Pension Fund are paid by at least twice as many people as they receive pension benefits. However, as of today, one employee maintains more than one pensioner: currently, contributions to the Pension Fund of Ukraine in favor of fewer than 13 million people pay pensions to 11.2 million pensioners.
Every year there are fewer and fewer payers to the pension fund, and in the future, this trend will only grow, as the birth rate is declining every year. At the same time, life expectancy is increasing. Therefore, we should start looking for appropriate financial solutions and tools that could provide each of us with decent financial protection and carefree old age.
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