Roman Semenukha: Two questions on the pension reform to the Prime Minister

We have been talking about a pension reform since 2001. This issue has already become a matter of moral and political responsibility of all Ukrainian prime ministers. However, let’s be frank: we will only be able to feel some positive effect of this reform in a medium term, while the ministers’ term of office is limited. Therefore, in order to implement this reform it is necessary to have political will.

So what does the Cabinet of Volodymyr Hroisman actually suggest and will it have enough will for a real reform?

A show-down

The government is actively announcing that the pension reform will begin as early as this year. However, such decisions should be made on the basis of consensus, and only a jointly developed document, which has at least some prospect of getting 226 votes, should be registered in the parliament.

It is necessary to create a working group, which would include the Prime Minister of Ukraine, the Ministry of Finance, the Ministry of Economy, the Ministry of Social Policy, a representative of each parliamentary faction or group. Also a wider circle of experts and interested people should be involved in the discussion. Today this is not happening.

Moreover, the society does not know anything about the pension reform, except for some outlines of which Volodymyr Hroisman spoke on last session Friday in the parliament. I have two public questions for him.

First, the Prime Minister says, “We will not raise the retirement age.” However, a few years ago, the parliament already changed the law on state mandatory pension insurance and increase of the retirement age for women. What does “we will not raise it” mean? We will not make changes or we will interfere with the legislation which has already launched the increase mechanism?

Secondly, they say, “We will increase pensions.” But this year there is a record high deficit of the Pension Fund. How are you going to raise pensions? I believe the taxpayers, first of all, those 12.9 million people who are paying a unified social tax today, should know about this.

What should reform look like?

To begin with, it is necessary to restore order in the solidarity system and verify all payments. Roughly speaking, to count everybody and understand how much money we need. This will prevent payments to “ghost recipients”.

The second thing is the reform of the Pension Fund. Today we are spending 3 billion hryvnias on its maintenance and administration of the process! We spend less on the central bodies of the Ministry of Internal Affairs – and this is in the conditions of our already police state.

The next step is a further deshadowing of salaries. In our opinion, it is necessary to unite the unified social tax and a personal income tax so that in total we could get a maximum of 30%. This will encourage the business to continue going out of the shadow and to give income to the Pension Fund.

Therefore, we need a major solidarity reform. And following the stabilization in the banking sector, we can launch the next stage – a cumulative one. We need to be extremely cautious in order to make sure that this stage is launched when we are fully ready. Otherwise, it will be as it happened with savings in the Soviet Union.

Roman Semenuha

object(WP_Term)#7751 (16) { ["term_id"]=> int(1) ["name"]=> string(4) "News" ["slug"]=> string(4) "news" ["term_group"]=> int(0) ["term_taxonomy_id"]=> int(1) ["taxonomy"]=> string(8) "category" ["description"]=> string(0) "" ["parent"]=> int(0) ["count"]=> int(4083) ["filter"]=> string(3) "raw" ["cat_ID"]=> int(1) ["category_count"]=> int(4083) ["category_description"]=> string(0) "" ["cat_name"]=> string(4) "News" ["category_nicename"]=> string(4) "news" ["category_parent"]=> int(0) } object(WP_Term)#7752 (16) { ["term_id"]=> int(133) ["name"]=> string(8) "Articles" ["slug"]=> string(9) "analytics" ["term_group"]=> int(0) ["term_taxonomy_id"]=> int(133) ["taxonomy"]=> string(8) "category" ["description"]=> string(0) "" ["parent"]=> int(1) ["count"]=> int(431) ["filter"]=> string(3) "raw" ["cat_ID"]=> int(133) ["category_count"]=> int(431) ["category_description"]=> string(0) "" ["cat_name"]=> string(8) "Articles" ["category_nicename"]=> string(9) "analytics" ["category_parent"]=> int(1) }