14:42 02.07.2016

'We are on way of stabilizing joint obligation system, Pension Fund' – Finance minister

3 min read
'We are on way of stabilizing joint obligation system, Pension Fund' – Finance minister

Ukraine's Finance Ministry does not plan to support revoking single social security tax and payment of pensions directly from the national budget in Ukraine, Ukrainian Finance Minister Oleksandr Danyliuk has said.

"The sense of the proposed option is the following: in our case the deficit of the Pension Fund is more than the half of its expenses, it occurs that the national budget de facto finances pension payments. This is only one of several options. We are stabilizing the joint obligation system and the Pension Fund. If payments are settled directly from the national budget, they will be lost there and diluted. We would not see the full picture, we would not understand if we do the right things. It is better to retain the Pension Fund and stabilize it. This would more help to protect citizens," the minister said in an interview with ZN.UA.

"We should achieve the balance of the Pension Fund. For example, there are expenses that are alien to its functions. The fund should get rid of them," Danyliuk said.

He pointed out the rule of the State Fiscal Service in accelerating the removal of the economy from the shadows.

"Bringing the economy out of the shadows is not proceeding as expected. It is not enough to reduce rates. Conditions benefitting businesses which declare real wages and income should be created …. This is our goal," he said.

ZN.UA wrote that the International Monetary Fund (IMF) is convinced the transfer to the defined contribution pension system requires joint obligation system reform. The IMF insists on increasing pension age. The Social Policy Ministry opposes this.

Danyliuk said that Ukraine and the IMF are on the same page regarding the planned UAH 145 billion deficit of the Pension Fund.

"The deficit is foreseen in the budget. We are on the same page with the IMF in the issue. Payment pensions in full and social protection of citizens are important for our government, and the Pension Fund would receive required financing," the minister said.

Asked about the pension reform, Danyliuk announced the introduction of some changes.

"We have started the budget process. The Pension Fund is an integral part of the budget. We will analyze its operation, expenses and take into account many factors. I do not like spot methods… A comprehensive approach is required. The system that would make people to feel they are protected. This is important. Populism should be reduced… simply sit and start working. We are obliged to give normal pensions to our citizens, not words on the wall. If the system is unstable for the future, whatever spot decisions we make, we will continue financing ineffective expenses, and the deficit will continue to grow. From whom will we take money? From taxpayers. This is not an option," he said.

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