Money, finances and credit

Ways of pension system improving as a factor of state’s social securit

Economic Annals-XXI

Economic Annals-ХХI: Volume 138, Issue 1-2(2), Pages: 36-39

Citation information:
Shevchuk, N. (2014). Ways of pension system improving as a factor of state’s social security. Economic Annals-XXI, 1-2(2), 36-39. https://ea21journal.world/index.php/ea-v138-09/

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Natalia Shevchuk
Lecturer,
Lviv State Academy of Finance
3 Kopernik St., Lviv, 79000, Ukraine
natalishevchuk@ukr.net

Ways of pension system improving as a factor of state’s social security

Abstract. Introduction. Economically and socially inefficient state of the pension system indicates the need for a high-quality pension reform in Ukraine. The main purpose of the pension reform should become ensuring incomes and social standards, guaranteed to the citizens by the Constitution of Ukraine and by the laws of Ukraine resulting in social security to the citizens of the state.

The purpose of this work is to study theoretical approaches and give practical recommendations for improving the pension system in Ukraine and its financial support in terms of reforms. In its turn, this will give the opportunities to provide an appropriate life level of elderly people and other disabled groups based on social justice, to harmonize relations between generations and to promote the economic growth of the country as a whole and, in particular, to ensure the stability of the pension system functioning.

Results. Such basic organizational, legal and socio-economic problems of pension support as increasing the pensioners’ proportion in the population, the fact that pensions do not meet minimum social standards, the disparities of formation and use of the Pension Fund of Ukraine (PFU) budget are considered. Pension contribution rates in Ukraine are much higher than in other European countries: in Czech Republic – 28%, in Hungary – 26.5%, in France – 24%, in Sweden – 18.9%. There are disparities between pensions and pension costs for women and men in Ukraine.

Evidently, there is a need to balance the revenues and expenditures of the Pension Fund. However, the social impact of the pension reform in Ukraine is very important, because, first of all, the pension reform should establish social justice and financial security of the population.

The envisaged reduction in the deficit of the Pension Fund by the predominance of the growth of insurance premiums over insurance costs will lead to a decline in the real pensions.

Conclusion. Therefore, the main public pension policy priorities in the context of social and economic security of Ukraine should be considered as the following ones:

  1. Changing the distorted structure of GDP.
  2. Development of domestic production.
  3. Legalization of wages. Eliminating of the so called «wages in envelopes» should become another effective tool for balancing the financial condition of the PFU.
  4. Exemption of the PFU from inappropriate payments.
  5. Increased control over the administration of the pension system.
  6. Introduction of the mandatory funded pension system.

Only an integrated approach to the implementation of the pension reform will give an opportunity to achieve optimal results in the shortest terms and with the maximum social effect that should be the main aim of every reform of any European state.

Keywords: Pension Support; Pension System; Social Security; the Pension Fund of Ukraine

JEL Classification: G23; H53; H55; H60

References

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Received 30.11.2013

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