Non-state pension provision in Ukraine: status and prospects
The article proposes a general assessment of the state of non-state pension provision in Ukraine in the conditions of a full-scale war against the background of demographic challenges and forced migration of the population. Based on the results of the analysis of the five-year dynamics of the main qualitative indicators of non-state pension funds (NPFs) – assets, participants’ contributions and payments, it is concluded that positive changes are observed in the activities of NPFs, although in general, non-state pension provision in Ukraine over the specified period has not achieved significant success. The specific features of NPF activities as institutional investors, as set out in Ukraine’s current pension legislation, have been identified. It is noted that NPFs do not have complete freedom when implementing investment processes which affects the content of their investment policy. It is emphasised that today the investment policy of NPFs is conservative, aimed at obtaining stable income with a minimum level of risk. It was found that the lion’s share of pension assets is invested in government securities and bank deposits, and over the past five years the proportion of investments in these financial instruments has tended to increase. It is noted that in international practice, the majority of pension assets are invested in shares. Given the underdevelopment of the stock market in Ukraine it is emphasised that there is a limited list of financial instruments that could be used by NPFs to invest pension contributions. It was established that NPFs’ expenses for the services of financial intermediaries are quite significant, and this reduces the amount of assets for receiving investment income and affects pension payments. The obstacles to the development of non-state pension provision in Ukraine were identified and analysed, in particular the lack of effective tax incentives, the high cost of living and increasing poverty in conditions of a full-scale war, and the low level of financial literacy of the population. Promising directions for the development of non-state pension provision in Ukraine were identified.
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