Money, finances and credit

Financial aspects of mandatory state social insurance functioning in Ukraine

Economic Annals-XXI

Economic Annals-ХХI: Volume 136, Issue 11-12(2), Pages: 41-44

Citation information:
Malyovanyi, M. (2013). Financial aspects of mandatory state social insurance functioning in Ukraine. Economic Annals-XXI, 11-12(2), 41-44. https://ea21journal.world/index.php/ea-v136-11/

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Mykhaylo Malyovanyi
PhD (Economics),
Associate Professor,
Uman National University of Horticulture
1 Instytutska St., Uman, 20305, Cherkasy region, Ukraine
mihaiiiil@mail.ru

Financial aspects of mandatory state social insurance functioning in Ukraine

Abstract. Mandatory state social insurance is one of the most important forms of population social protection in modern conditions. A share of mandatory state social insurance expenses accounts for 45-50% of all expenses of the social protection system. During the last years, mandatory state social insurance expenses in Ukraine increased from 9.29% GDP in 1996 to 17.75% GDP in 2011. In addition, there is a considerable amount of problems of state social insurance system functioning, which, first of all, are connected to financial support of its different types. The performed analysis indicated there was a significant deficit of financial resources in the retirement insurance system of Ukraine. The author revealed that since 2004 the Pension Fund of Ukraine has been receiving considerable funds from the State Budget of Ukraine yearly. Nevertheless, its deficit increases yearly. For example, a share of deficit in total expenses of the Pension Fund of Ukraine grew from 4.9% in 1996 to 32.4% in 2012. Deterioration of demographic conditions negatively affected financial stability of the Pension Fund of Ukraine due to a breach of its balance. A complicated state of retirement system financing influences possibilities of the state to provide support of other types of mandatory state social insurance in a corresponding manner. It is important to notice that other types of mandatory state social insurance have such an important role for population social protection as retirement support. Simultaneously, the analysis of financing of these types indicated a relatively stable situation compared to retirement insurance. The positive state of these insurance types is apparent from both sufficient financing of the Social Insurance Funds budgets due to insurance fee payment and consideration of the level of social payments. Although the system of social insurance of Ukraine consists of elements of social insurance, social protection, and social provision, the author states that the modern system of social insurance in Ukraine does not respond the insurance principles in full measures at the same time. All these factors negatively influence the long-term financial stability of state non-budget target insurance funds. Therefore, improvement of state non-budget funds financial activity should be primarily aimed at insurance principle development in order to increase insurance payments and provide financial stability of the whole mandatory state social insurance system. There is a need for rapid meeting of ongoing problems, which impede full-fledged social insurance institute establishment.

Keywords: Social Insurance; Financial Support; Financial Resources; Budget; Insurance Payment

JEL Classification: G22; H53; Н55

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Received 03.10.2013

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