The funded pension system in Ukraine will not provide for tax raising and will work at the expense of existing deductions from ERU and personal income tax. At will, citizens will be able to make additional voluntary contributions to increase their pension payments.

This was reported in the Ministry of Social Policy of Ukraine. The bills related to the reform are already submitted to the authorities for further approval.

The main goal of the reform is to create a fair and transparent pension system taking into account the interests of each employee. According to the ministry of social policy Oksana Zholnovich, the new system will guarantee that people will receive a pension that provides 40% of the average wage through life.

It is expected that the changes will reduce dependence on the joint system where payments are made at the expense of current taxes, and add a cumulative component to make employees to make contributions to their own future.

The accumulative system suggests that part of the funds for the deposits of the employee and the employer will be sent to the individual pension account of the employee. The main provisions of the reform:.

As the ministry explains, this will not lead to an increase in the load on taxpayers, because to introduce reform will use the mechanisms of deductions. According to the forecasts of the Ministry of Social Policy:.

Minister Zholnovich emphasized that the substitution coefficient (the ratio of the pension to the average wage) in the new system will be 40%. This complies with European standards and significantly exceeds the current indicator of 28%, observed among most pensioners.

According to Zholnovich, the transition to a funded system is a necessary step to ensure a stable future pensioners. She noted that the reform is based on successful international examples and meets European regulations.