Domestic pension system - the need for reform
Annotation. The present condition of the pension provision system in Ukraine and its three levels have been regarded in the paper. The first level includes the system of state contributory and distributive type of pension. The coefficient of demographic load and its relation to the first pension level has been determined. The retired people have been divided according to the type and amount of the pension awarded (old age pension, disability pension, survivor’s pension, retirement pay, social security pension). The sources of income and expenditures of the Pension Fund and the factors having impact on these items have been analyzed. To a great extent the funds of contributory pension system depends on correlation of the number of retired people and the number of social security tax payers. The latter depends on such factors as coefficient of demographic load on the working population; employment level of working population; the number of social security payers in the general number of employed population.
A lot of attention have been paid to the analysis of the second and the third pension level. The second level includes the compulsory financial defined contributions when the costs are accumulated on the personal pension accounts of citizens. The third level includes the voluntary financial contributions of citizens on their personal pension accounts at not public insurance companies. The advantages and probable risks of the two levels have been considered. When the pension system is reformed the citizens will be able to receive three pensions from three different levels and their amounts will depend on the amount of funds accumulated on the personal account by each person. New pension system of Ukraine needs finalization of a lot of components of social and economic development. That’s why the main principles of its formation and introduction have been presented. These are: systematic approach; to be dynamic and adaptable to the exposed changes; compulsory contributory component of the pension system that would enable to redistribute incomes in the favor of low paid workers; responsibility of the state for the introduction of the pension system; complex approach to the pension system.
Main problems in the functioning of the pension system and the ways of their solution have been defined.
Key words: pension, pension provision, pension system, level of pension system, social protection.