Problems of income and expenditure balance of the pension fund budget of Ukraine

Mariya Lalakulych,Lesya Rybakova,Erika Yuhas

doi:10.38188/2534-9228.21.2.09

Abstract

The steady budget deficit of the Pension Fund of Ukraine necessitates balancing its budget and finding effective opportunities to improve the current pension system. The revenue and expenditure part of the budgets of the Pension Fund for the last 7 years has been analyzed, time series characterizing various aspects of its activity have been constructed, polynomial modeling of trend series of revenues and expenditures has been carried out. To improve the actuarial basis of the joint pension system, it has been suggested to segregate social pensions, which are not provided by insurance premiums, and therefore cannot be the object of insurance payments, but should be subject to state (budget) funding. The shadow sector of the economy and the arrears of enterprises for the payment of salary to employees have been identified as a significant factor in the disproportion of the budget of the Pension Fund of Ukraine, measures to respond to these violations have been identified and analyzed. Relevant recommendations included a revision of the institutional position on limiting the amount of salaries on which SSC (single social contribution) is accrued, the redistribution of relevant contributions between employees and employers, and the harmonization of the accrual base with the average salary. Further research is recommended to focus on the peculiarities of balancing the revenues and expenditures of the budget of the Pension Fund in the case of entrusting it with the functions of other social insurance funds of Ukraine, as well as in connection with the introduction of the second level of pension provision.

Highlights

The budget deficit of the Pension Fund of Ukraine (PFU), due to the systematic violation of the principle of economic dependence of consumer expenditures on income levels, for many years leads to significant imbalances in the development of the Ukrainian pension system of the solidarity type
The reform of Ukraine's pension system should be seen as a driving force for other social and economic reforms, including strategic labor market reform aimed at reducing the effects of the shadow economy
Information interaction with the user's e-cabinet was introduced on the Unified State Web Portal of eservices "Portal Diya", digitization of pension cases continued in all regions of Ukraine, there was created technical base for the introduction of electronic workbook accounting and automated centralized subsystem “Assignment and payment of pensions based on electronic pension business” of the Integrated Comprehensive Information System of PFU (Pension Fund of Ukraine, 2021)

Summary

Introduction

The budget deficit of the Pension Fund of Ukraine (PFU), due to the systematic violation of the principle of economic dependence of consumer expenditures on income levels, for many years leads to significant imbalances in the development of the Ukrainian pension system of the solidarity type. We agree with the conclusions of Boreiko (2019) that the increase in contributions from the state budget to cover the PFU deficit has a negative impact on the development of the national economy and suggests to start implementing a funded pension system in Ukraine without reference to the unfavorable socio-economic situation. A significant number of researchers, agreeing with the conclusions on the main problems of PFU, provide recommendations for the introduction of a savings system or analyze the activities of private pension funds. In the development of the pension system of Ukraine today there are a number of problems with the formation of PFU revenues, their effective use and budget balancing, which are especially exacerbated by the difficult socio-economic situation, deteriorating demographics and prolonged economic crisis.

Material and methods

Findings

Conclusions