RISKS OF THE SOLIDARITY LEVEL OF UKRAINE’S PENSION SYSTEM

Abstract.

The article investigates into the main types of risks and their impact on the system of solidarity level of pension provision in Ukraine. The demographic risk is proved to be one of the key factors affecting the formation of modern pension systems. The demographic burden on the working generation is growing due to an increase in the retirement age. Ttherefore, the solidarity system is unable to fulfil its obligations to form an adequate level of pensions that leads to a nominal and real pension reduction. The economic risk affects significantly the solidarity level of pension provision as well. The country’s economic development is the basis for the formation of wages, which in turn also affects the level of pensions. There is no increase in the employees’ real incomes due to the low level of economic growth. Pensions accordingly remain low in the solidarity pension system. The political risk posed by factors of a political nature is considered to be another risk affecting the formation of pension systems. It is proved that these risks collectively predetermine the problems of a modern pension system in Ukraine. The low level of pensions, which led to the impoverishment of a significant number of people who have lost their ability to work, is believed to be one of the biggest problems. Besides, the low level of filling with its own revenues is characteristic to the Pension Fund of Ukraine. Consequently, it is unable to fulfil its obligations without the support of state budget funds. Solving these problems is possible under condition of forming a multi-level system of pensions, especially its accumulative component. It will partly offset the impact of the above-mentioned risks on the solidarity level of pensions

Keywords: risk, levels of pension provision, risks of the solidarity level of pension provision, demographic risk, political risk, economic risk, pension, pension provision

https://doi.org/10.33249/2663-2144-2019-77-4-77-85