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DEMOGRAPHIC AND FINANCIAL
PRECONDITIONS OF THE PENSION
REFORM IN UKRAINE:
FORECAST – 2050
Kyiv - 2010
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by the UNDP
DEMOGRAPHIC AND FINANCIAL
PRECONDITIONS OF THE PENSION
REFORM IN UKRAINE:
FORECAST – 2050
Kyiv – May 2010
М. Święcicki, L. Tkachenko, І. Chapko. DEMOGRAPHIC AND FINANCIAL
PRECONDITIONS OF THE PENSION REFORM IN UKRAINE: FORECAST – 2050. - К.:
Blue Ribbon Analytical and Advisory Centre, 2010.-72 p.
This study introduces forecasts of the demographic situation in Ukraine and their impact on
the indicators of the Ukrainian pension system’s financial capacity up until 2050. Following
an examination of the influence of demographic pressure on the pension system, of payers
of contributions and of the State Budget of Ukraine, an assessment of the efficiency of
different options for increasing the retirement age of women and men is made. The goal of
this study is to provide politicians and the general public with an in-depth analysis of
demographic tendencies and their financial impact on the pension system. As a
consequence they can identify the most optimal decision for increasing the retirement age
from the point of view of financial stability and ensuring decent pensions. The publication
contains many calculations and statistical information.
This brochure is prepared based on the results of the Study “DEMOGRAPHIC AND FINANCIAL
PRECONDITIONS OF THE PENSION REFORM IN UKRAINE: FORECAST – 2050” conducted by
the Blue Ribbon Analytical and Advisory Centre following its own methodology and applying
models of the Institute of Demography and Social Studies of the National Academy of
Sciences of Ukraine.
This brochure is intended to stimulate public debate on pension reform in Ukraine and is
aimed at representatives of government, parliament, scientists, students, media, as well as
the general public.
Foreword
The Blue Ribbon Analytical and Advisory Centre (BRAAC) decided to conduct an indepth analysis of the demographic and financial preconditions of the pension reform in the
course of its cooperation with the Ministry of Labor and Social Policy of Ukraine. In this
brochure the results of the Study “DEMOGRAPHIC AND FINANCIAL PRECONDITIONS OF THE
PENSION REFORM IN UKRAINE: FORECAST – 2050” are introduced.
The goal of this study is promoting better understanding of the economic
complications related to realizing the reform of the Ukrainian pension system and choosing
the optimal method of decreasing the demographic load on the pension system, limiting
growth of expenditures from the state budget directed at support of the pension system,
decreasing the load on the tax payers and contribution payers, and also ensuring decent
pensions for present and future pensioners.
The study contains an assessment of the impact of the demographic prospects on the
financial capacity of the pension system up until 2050, taking into account the adjusted
demographic forecast as of 2009. It also assesses the different methods for increasing the
retirement age and their influence on improving the economic and financial pension system
indicators.
The methodology of the Study “DEMOGRAPHIC AND FINANCIAL PRECONDITIONS OF
THE PENSION REFORM IN UKRAINE: FORECAST – 2050” was developed by the Director of the
Blue Ribbon Analytical and Advisory Centre, Мarcin Święcicki, jointly with the Senior Expert
of the Centre, Dr. Inna Chapko, who has a Ph.D in Economics. Dr. Lidia Tkachenko, who also
has a Ph. D. in Economics and is Senior Research Scientist of the Institute of Demography and
Social Studies of the National Academy of Sciences of Ukraine, performed the study. The
authors express their gratitude to Dr. Mustafa Sait-Ametov, a Ph. D. in Economics, Chief
Specialist of the Department for Macroeconomic Analysis of the Ministry of Finance of
Ukraine for his essential advice and consultations on assessment of how increase in the
retirement age would influence macroeconomic indicators. The authors express their
gratitude to the Director of the Institute of Demography and Social Studies of the National
Academy of Sciences of Ukraine, a Academician of the National Academy of Sciences of
Ukraine, Ella Libanova and to the Institute’s Senior Research Scientist, Pavlo Shevchuk, for the
opportunity to utilize the most recent demographic forecast developed by them, taking into
account the latest macroeconomic tendencies and peculiarities of the Ukrainian labor
market.
We hope that increased awareness of these issues by society and politicians will
promote the consensus needed to reform Ukraine’s pension system. We sincerely hope that
this brochure will play an important role in those processes.
Мarcin Święcicki
Director of the Blue Ribbon Analytical and Advisory Centre
3
CONTENTS
FOREWORD................................................................................................................................................................ 3 EXECUTIVE SUMMARY ........................................................................................................................................... 6 1. DEMOGRAPHIC PROSPECTS OF UKRAINE AND THEIR IMPACT ON THE PENSION SYSTEM .. 10 Forecast of the Number of Contributors ............................................................................................... 10 Forecasts on the Number and Composition of Pensioners ............................................................ 11 Ratio of Pensioners to Contributors ........................................................................................................ 11 Retirement Age Dynamics in Ukraine and in the World .................................................................. 12 Life Expectancy at Birth or at the Time of Retirement? ................................................................... 14 Comparison of the Period of Staying Retired and Labor Activity................................................. 14 Pension Expenditures in Ukraine ............................................................................................................. 15 Consequences of the Demographic Situation on Ukraine’s Pension System .......................... 16 Box 1 Demographic Forecast for Ukraine by 2050 ........................................................................... 19 2. MODELING AND CHOOSING THE OPTIMAL OPTION FOR INCREASING UKRAINE’S
RETIREMENT AGE ........................................................................................................................................... 23 Necessity of Equalizing Retirement Age for Men and Women ..................................................... 23 Methods for Increasing the Retirement Age........................................................................................ 23 Modeling Options for Increasing the Retirement Age for Women to 60 .................................. 24 Modeling of Options to Increase Male and Female Retirement Age to 62-65 ........................ 29 Modeling the “Crisis Reduction” Option for Increasing Retirement Age of Women and Men
to 65 .................................................................................................................................................................... 34 3. ASSESSING THE INFLUENCE OF INCREASED RETIREMENT AGE ON FINANCIAL AND OTHER
ECONOMIC INDICATORS ............................................................................................................................. 35 Assessing the Influence of Increased Retirement Age on the Labor Market ........................... 35 Influence of Increased Retirement Age Increasing on GDP ........................................................... 37 Influence of Increased Retirement Age on the Pension System’s Financial Conditions ...... 38 Influence of Increased Retirement Age on the State Budget ........................................................ 39 CONCLUSIONS ...................................................................................................................................................... 40 4
ANNEXES ................................................................................................................................................................. 41 Annex 1. Total Fertility Rate in Europe Countries, Children per Women ......................................... 41 Annex 2. Demographic Forecast for Ukraine up to 2050 ...................................................................... 42 Annex 3. Life expectancy at birth in Europe countries ........................................................................... 41 Annex 4. Ratio of Population 65 and Over to the Amount of Population 15-64 Years
Old in European Countries, % ....................................................................................................... 45 Annex 5. Pension Expenditures Financed from the State Budget of Ukraine, 2009 .................... 46 Annex 6. Pension Expenditures as a Percentage of Ukraine’s GDP ................................................... 48 Annex 7. Retirement Age Set by Effective Legislation of Countries of the World as of
2005-2006 ............................................................................................................................................ 49 Annex 8. Difference Between the Retirement Age of Females and Males through
Countries of the World (data for 2005-2006)........................................................................... 50 Annex 9. Life Expectancy at Birth for Women in the Countries Where Retirement Age
Does Not Exceed 55 Years (data of 2005-2006) ...................................................................... 50 Annex 10. Life Expectancy at Birth and in the Age of 65 in Ukraine and EU Countries,
2006-2007 ............................................................................................................................................ 51 Annex 11. Forecast of Pension System’s Financial Sustainability Without Changes in
Retirement Age .................................................................................................................................. 52 Annex 12. Forecast of Pension System Sustainability After Increasing Retirement Age
for Women by 5 Years, Up to 60, at Once in 2012 (rapid option) ..................................... 55 Annex 13. Forecast of Pension System Sustainability Assuming the Increase of the
Retirement Age for Women Gradually, by Half a Year Annually, Up to 60, in
2012-2021 Period .............................................................................................................................. 58 Annex 14. Forecast of Pension System Sustainability After Increasing Retirement Age
for Women by 5 Years, Up to 60, at Once but Only in 2021 (delayed option) ............. 61 Annex 15. Forecast of Pension System Sustainability After Gradual Increasing
Retirement Age Up to 62, for Women in the Period 2012-2021 and for Men
in the Period 2022-2025, by Half a Year Annually.................................................................. 64 Annex 16. Forecast of Pension System Sustainability After Gradual Increasing
Retirement Age Up to 65, For Women in the Period 2012-2031 and For Men
in the Period 2022-2031, by Half a Year Annually.................................................................. 67 Annex 17. Forecast of Pension System Sustainability After Gradual Increasing
Retirement Age Up to 65, For Women In the Period 2011-2030 and For Men
In the Period 2011-2020, by Half a Year Annually.................................................................. 70 5
Executive Summary
The forecast of the demographic situation and its influence on the pension system in
Ukraine is not encouraging: the number of contribution payers will decrease by 25% by
2050, while the number of pension recipients will increase by 8%. The solidarity pension
system, which uses redistribution of revenues to make pension payments will not stand such
a load without changes and additional contributions. Pension payments made at the
expense of own revenues (contributions by participants) of the Pension Fund of Ukraine
(PFU) – the so-called “insurance part” – amounted to almost 80% of all pension payments in
2009 (according to the planned Pension Fund budget for 2009). The remainder was financed
from the State Budget of Ukraine. The deficit not covered by the insurance part amounted to
8% of the total planned PFU expenditure1. Under conditions of an improving
macroeconomic situation and an increase in revenues, the deficit may decrease or disappear
completely but according to demographic forecasts it will be impacted by negative
demographic trend pressures, which will increase annually until 2015.
Modelling the development of the “insurance part” of the pension system until 2050
shows that if there are no changes to the system the deficit in the PFU’s, revenues arising
solely from contributions will amount to 2% in 2015, to 8% in 2020, to 12% in 2025, and to
30% in 2050. It will be impossible to retain the major pension system indicators at their
current level under this situation, particularly the ratio of the average pension to the average
wage, the size of the PFU’s budget subsidy2 and the rate of contributions.
The demographic load will lead to a decrease in the ratio of the average pension to the
average wage from 40% in 2009 to 33% and 28% in 2050 or to an increase in the subsidy
from the State Budget aimed at covering the “demographic” deficit. In order to cover the
demographic load by an increase in contributions (which are already too high), the total
contribution rate would need to be increased from 35.2% in 2010 to 50% in 2050.
Transferring contributions to individual pension accounts, limiting those entitled to
privileged pensions, increasing retirement age in accordance with the demographic
situation, and stimulating an increase in the time people remain in the labor force are
international practices of solving of the demographic skew and imbalance in the solidarity
pension system3. Taking decisions on these issues is a difficult task but already the point has
been reached where such decision has to be made in Ukraine in order to prevent an
irreversible situation in the future.
Forecast of the Impact of the Demographic Trend on the Pension System. The share
of the population older than the effective retirement age (60 for males and 55 for females)
was equal to 26% in 2009. It will increase to 29% in 2021 and to 38% in 2050. The share of
population older than 65 years of age will increase from 16% in 2010 to 25% in 2050.
1
According to the plan for 2009. In reality it can reach 15% at the end of 2009.
Share of expenditures of the PFU which is financed from the budget – payment of particular categories of
pensions, premiums, and raises.
3
For more details see:
- Marek Góra. Pension Reform: a Challenge for Ukraine / edited by M. Święcicki, І. Chapko, А. Yermoshenko. - К.:
Blue Ribbon Analytical and Advisory Centre, 2008.
http://brc.undp.org.ua/img/publications/Pension%20reform[1].pdf
- Expert Note of the Blue Ribbon Analytical and Advisory Centre (UNDP/EU) “Problems of Rising Retirement Age
in Ukraine” http://brc.undp.org.ua/img/publications/Expert_note_RaisingPensionAge_full.pdf
- Analytical Note of the Blue Ribbon Analytical and Advisory Centre (UNDP/EU) Life expectancy at official
retirement age, deductions for pension provision, and retirement age increase in various countries of the world
prepared at the request of the Ministry of Labour and Social Policy of Ukraine
http://brc.undp.org.ua/img/publications/Reirement%20age%20and%20crisis.pdf
2
6
The ratio of the number of people older than 65 years of age to the number of people
aged from 15 to 64 years of age will increase to 23% in 2020 and to 38% in 2050.
Already today Ukraine has 4 retirement age people (over 60/55) for every 10 working
age people and by 2050 this ratio will be approximately 8. In addition to the problem of the
population’s demographic aging, the situation in the pension system is further complicated
by a widening of informal employment shown by the fact that only 75% of the total
number of employed persons actually pay pension contributions. Currently there are 9
pensioners for every 10 contributors. The number of contributors and the number of
pensioners will be equal in 2025 and by 2050 the number of pensioners will exceed the
number of contributors by 25%.
Impact of the Cost of the Pension System on GDP. Ukraine has one of the largest
percentages of pension expenditures as a share of the GDP in Europe (13.9% in 2007, 15.8%
in 2008, and over 18% in 2009). Pension expenditures for 2010 are forecasted at 17% of
GDP. Pension increases are chaotic, ungrounded, and unpredictable in nature due to election
campaigns. Pension expenditures outstrip inflation and the growth in wages even though
the economic capacity to ensure such growth is insufficient. For the whole period since 2004
no measures aimed at enhancing pension revenues have been taken, except for some
increase in pension contributions for employers and several attempts to force entrepreneurs
– natural persons - to pay at least the minimum pension contribution.
Retirement Age in Ukraine and in the World. The effective retirement age in Ukraine
was set in the 1930s and has not been revised since. Only Belarus, the Russian Federation,
Uzbekistan, and Ukraine among CIS countries left retirement age unchanged (55 years for
females and 60 for males). The most common age of moving from work to retirement is 6265 years of age in European countries. On average, the majority of the Post-Socialist
countries raised retirement age by 1.5-5 years during 1989-2006. Establishing equal
retirement ages for females and males is another world trend.
According to estimates of experts, there are no objective physiological, economic or
social grounds to maintain the lower retirement age for women in Ukraine. Moreover, the
lower retirement age and, correspondingly a lower period of contributory service, lead to
significantly smaller pensions which cause a higher risk of poverty among women in their old
age. Today the average pension of women is equal to just 67% of the average pension of
men, whereas the ratio of the average wage of women to men is equal to 75%.
Problematic Issues of Increasing the Retirement Age. Low indicators of life
expectancy and aggravating the situation in the labor market are usually named as the
main barriers to increasing retirement age in Ukraine. However, these arguments are pretty
easy to refute. Increased retirement age will not cause any significant increase in
unemployment, since a significant number of pensioners continue working today (i.e. a very
significant number of jobs for elderly people exist). In addition, a clear segregation of the
employed through “youth” and “old age” employment sectors has formed in society, i.e.
continuing the employment period of the elderly will have no significant influence on
employment opportunities for youth. Although significantly lower in Ukraine, when
compared to European countries, life expectancy indicators do not justify the existing
retirement age. Life expectancy for women at birth is almost 12 years higher than that for
men but they retire 5 years earlier.
First of all, it is necessary to consider life expectancy at the time of retirement, since
this shows how long a person will be retired for. For example, in Ukraine life expectancy at
retirement age (60 years) for males is equal to 14 years. This is similar to other countries.
For Ukrainian women at retirement age (55 years) life expectancy is equal to 25 years. This
is higher than life expectancy at retirement age in many countries around the world where
7
retirement age is about 60-65 years. For Great Britain – life expectancy at the retirement age
is 23 years, Italy – 24.9, Germany – 20.9, Poland – 22, Slovakia – 18, the USA – 17.7, Hungary –
20, France – 26, Czech Republic – 19.2, Sweden – 20, and Japan – 23). Therefore, women
work a shorter period of time in Ukraine than women in other countries while they stay
retired longer. Ukrainian women hold the world record in correlation between the length
of retirement and the labor period needed to obtain a pension: 7.1 years of staying retired
for every 10 years of labor, while in other countries the ratio is: England – 5.8, Hungary – 4.9,
Germany – 4.6, Italy – 6.2, and Poland – 5.5.
Increasing retirement age has only a temporary impact on suspending the processes
of reducing the pressure on the pension system. As the results of the model show, the load
on the contribution payers starts growing when significant numbers start to retire
immediately after reaching the new retirement age. A by-product of increased retirement
age is an increase the number of disability pensioners. The inability to obtain an old age
pension will encourage pre-retirement age contributors who have health problems to apply
for a disability pension. Therefore, the reduction in the total number of pensioners will not
correspond to the reduction in the number of old age pensioners.
Choosing the Optimal Option for Increasing Retirement Age. Results of the
calculations show that the most rational option is a gradual increase in the retirement age,
even though the “crisis reduction” option, providing a rapid impact on the system (see the
text below) is also possible.
Retirement age may be increased in two stages:
-
firstly – increasing retirement age for women to the level set for men (60);
-
secondly – increasing retirement age for women and men to the threshold
common for European countries – 62-65.
Assessing the Efficiency of Increasing Female Retirement Age by 5 Years. Increasing
retirement age for women by 5 years would decrease the load of pensioners on contributors
from 97% to 87% in 2021 and extending from 2025 to 2039 the critical date when the
number of pensioners will exceed the number of contributors. By increasing female
retirement age by 5 years, the ratio of retired persons to working age persons will remain at
the current level (40%) in 2021, whereas if there was no change it would reach 50%.
The above-mentioned ratio will start growing after the increase in retirement age has
been completed. This growth will be particularly quick from 2035. However, the
“contribution” of the retirement age increase to softening the demographic load will be
significant: the ratio of retirement age persons to working age persons will be equal to 64%
in 2050. This is 12 percentage points lower than if there was no change in the retirement
age. Increasing retirement age should increase the average length of pensionable service
of women to at least 36 years in 2021 (currently it is 33) and the life expectancy in retirement
should decrease from the forecasted 25 years to 21 leading to pensions being paid, on
average for 21 years
Assessing the Efficiency of Increasing Male and Female Retirement Age to 62-65.
Increasing male and female retirement age to 62 would decrease the ratio of the number of
pensioners to the number of contributors by 16 percentage points in 2025 when compared
to the level if there was no change. It would also lead to a deferral of the time when the
number of pensioners and contributors was equal until to 2045.
A further increase in the retirement age for women and men to 65 years of age would
decrease the load of pensioners on contributors to 80% in 2031 compared to 105% if there
was no change. The moment when the number of pensioners would exceed the number of
8
contributors would be beyond the limits of the forecast period – the ratio between the
abovementioned cohorts would be equal to 97% in 2050, whereas in the case of an
unchanged retirement age it would be 125%.
The calculation results show that permanent growth in retirement age by six months
each year first for women and then, once equalized at 60, increasing the retirement age for
both women and men to 65 years of age would prevent a dangerous increase in the load on
the pension system for the next 40 years starting from 2031. It also allows the temporary
maintenance of the ratio between pensioners and contributors at a level even lower
than it is now for a long time. This means that increasing retirement age to 65 for both men
and women could maintain the current ratio between the average pension and the average
wage – 40% (the replacement rate) – without the contribution rate increasing or without the
need for subsidies from the budget.
The “Crisis Reduction” Option for Increasing Retirement Age. Taking into account the
extremely difficult situation with pension expenditure’s financing, and the absence of real
opportunities for their significant decrease, a “crisis reduction” option for increasing
retirement age could be applied. This would increase retirement age for both women and
men up to 65 years of age starting from 2011 by six months a year each year. Under this
option age 65 men would reach retirement age in 2020 and women in 2030, i.e. gender
equalization of the retirement age would happen in 2030.
Undoubtedly, a simultaneous increase in the retirement age of both men and
women will have a much more significant impact on counteracting the increase in load on
the pension system in the short-term. The ratio of the number of pensioners to the number
contributors would decrease to 77% in 2011-2020, whereas if there was no change in the
retirement age it would reach 96%. In the case of a 2-stage retirement age increase it would
be equal to 86%.
Advantages of Increased Retirement Age. Increasing the retirement age leads to
enhanced employment and production. Under the conditions of unchanged labor
productivity, each percentage increase in the number of employed persons can justifiably be
considered as a contribution to generating additional GDP. A positive effect of increased
retirement, from the point of view of the state budget, will be reflected by an increase in the
number of tax payers and in the revenues from personal income tax, and by savings from
the budget funds appropriated for expenditures related to the different privileges for
pensioners, particularly free public transport. Maintaining of indicators of pensionable
service will also be of significant importance. In general, increased retirement age is
absolutely natural and the most appropriate step when there is a trend to an aging
population.
9
1. Demographic Prospects of Ukraine and their Impact on the
Pension System
The following three demographic tendencies are the major factors of the pension
system at the moment and in the long-term: 1) low birth rate, 2) an increased period of
education, and 3) growth in life expectancy. The first two factors decrease the number of
people in employment and the last factor increases the number of pensioners. Together all
three combine to become a significant factor on the load on the pension system.
A low birth rate, which is common for the current population’s reproduction,
conditions the reducing reproduction of generations, i.e. each next generation of children is
smaller in number than the generation of their parents. An increase in the duration of a
person’s education leads to a prolonged childhood period and later entry into the labor
market. Growth in the life expectancy predicts an increase in the percentage of old age
people within the structure of population. See Box 1 for details on the demographic forecast
for Ukraine.
Forecast of the Number of Contributors
Considering the results of the demographic forecast, the number of employed persons
and contributors shows a clear declining trend during the forecast period even under a fairly
optimistic scenario for the development of the domestic labor market (it is assumed that the
population’s economic activity level will stabilize at the existing level and the unemployment
level will decrease over the next 5 years to 6%)(Figure 1). Some increase in the scale of
employment is possible only prior to 2015. But even this increase is possible only due to an
expected decrease in unemployment. The number of employed will continuously decrease
after 2015 with the rate of decline accelerating. The number of pension contributors will
decrease in proportion to the rate of decline in the number of employed persons under the
condition of an unchanged level of participation in pension insurance of the employed. The
number employed will be equal to 15 million people in 2050. 11.6 million will be
contributors.
Figure 1. Forecast number, and composition, of the employed Ukrainian population to 2050,
million people
Source: calculations of the author
10
Forecasts on the Number and Composition of Pensioners
The number of old age pensioners and their percentage within the total number of
pensioners will slowly but steadily increase if the current retirement age remains.(Figure 2).
The number of pensioners will increase by 900,000 people from 2010 to 2050 (almost all the
gain will be due to an increase in the number of old age pensioners) and will reach 14.6
million people. In other words, the number of pensioners will be 25% more than the number
of contributors.
Figure 2. Forecast Number and Composition of Pensioners in Ukraine by 2050, million
people
Source: calculations of the author
Ratio of Pensioners to Contributors
The ratio between pensioners and contributors is extremely important for a
redistribution system. The first pillar of the Ukrainian pension system (the solidarity system in
which current payments to existing pensioners are made at the expense of the incoming
contributions from the employed) belongs to this type of system. Actually, the size of
incoming contributions from the employed determines to what extent the pension size is
able to compensate a loss of income and characterizes the level of life of pensioners
compared to the working population. The ratio of pensioners to contributors determines the
replacement coefficient in the most general sense, i.e. correlation between the average sizes
of pensions and wages.
Figure 3. Forecasted Ratios of Retired Persons to Working Age Persons and of the Pensioners
to Contributors in Ukraine by 2050, %
Source: calculations of the author
11
At the same time, this indicator is a justified indicator of the load on contributors, since
efforts directed at maintaining some level of substitution of incomes by pensions demand a
corresponding correction of the pension contribution rate. Otherwise, the inflow of
contributions will be insufficient to cover the whole expenditures’ volume and the pension
system will be in deficit. Therefore, under conditions of an increase in the correlation
between pensioners and contributors, the State and society have to decide to either increase
the pension contribution rate, or cover the deficit at the expense of other funds (usually,
appropriations from the State budget).
As Figure 3 shows, the ratio pensioners to contributors may be stable in the next 5
years under favorable conditions in the labor market: a decrease in unemployment and a
corresponding increase in employment would be able to support the cohort of the
contributors and even to ensure some increase in that cohort. However, the ratio of
pensioners to contributors will increase in parallel with the increase in the ratio of the
number of the retirement age people to the number of the working age people once the
unemployment level reaches its natural value (it is impossible to liquidate it completely).
Usually there are some reserves related to enhancing the population’s motivation for
economic activity and for restructuring employment, especially concerning the transfer of
informal sector employees into the formal sector. But even realization of these measures
(which is also pretty difficult) will not lead to overcoming the influence of the demographic
tendencies. According to the assumptions used in this forecast, the number of pensioners
will be equal to the number of contributors by 2025.
Retirement Age Dynamics in Ukraine and in the World
The effective retirement age in Ukraine was established in the 1930s and has never been
revised. Retirement age is already 65 years in many European countries or it is planned to reach
this level in the medium-term (65 is considered the common age to transfer from work to
retirement in the EU). The majority of the Post-Socialist countries raised retirement age by 1.55 years during 1989-2006 (Table 1).
Increased retirement age is also occurring in other countries of the world. The tendency
to equalize male and female retirement age is common around the world and is a necessary
precondition for securing gender equality principles in labor and pension rights. In particular
retirement age was increased solely for women in Belgium (from 60 to 64), Italy (from 55 to 57),
Portugal (from 62 to 65), and in Switzerland (from 62 to 64) from 1989 to 2006. The same
occurred in the following African countries - Burkina-Faso (from 55 to 56), Burundi (from 55 to
60), and Sudan (from 55 to 60). Retirement age similar to that in Ukraine is common, mostly,
for the African countries and in some other developing countries (Annex 7).
Some countries increased retirement age for women at higher rates than for men
aiming at gender equalization. For example, retirement age for women in Israel was
increased by 6 years (from 60 to 66), by 9 years in Japan (from 56 to 65), by 8 years in Turkey
(from 50 to 58), while retirement age for men in those countries was raised by 5 years of age.
In general, the retirement age for women and men is the same in the majority of countries
around the world (Annex 8).
Low life expectancy is usually given as a barrier to increasing retirement age in
Ukraine. But this argument is easily overcome. First of all, retirement age is not that
oriented towards the indicators of the life expectancy. As already mentioned, life expectancy
at birth for women is higher by almost 12 years than for men but women retire 5 years
earlier. If just the duration of life indicators were taken into account in determining
retirement age, then women should work till 72 years of age.
12
Secondly, life expectancy at birth is determined in accordance with the conventional
generation method whereby the death intensity through different age groups is attributed
to a generation born in the year of observation. In reality this generation will have its own
history, while conditions and quality of life will significantly differ from those of the “adult”
generations born earlier. Life expectancy at birth, calculated using the conventional
generation method, is an integral evaluation of the current death rate but may not be
considered as a reliable forecast for existing generations. Therefore, it may serve only as a
very approximate indicator for determining the old age threshold, i.e. loss of work capacity
due to old age serves as grounds for obtaining an old age pension. We need to mention that
life expectancy for women is significantly lower than that in Ukraine in many of those
countries where female retirement age is 55 (Annex 9).
Table 1. Retirement Age in Post-Socialist Countries as of 1989 and 2006, years 4
Bulgaria
Croatia
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Moldova
Romania
Slovakia
Serbia and Montenegro
Azerbaijan
Armenia
Georgia
Kazakhstan
Kirgizstan
Moldova
Turkmenistan
Belarus
Russian Federation
Uzbekistan
Ukraine
1989
60
60
60
60
60
60
60
60
60
60
60
60
60
60
60
60
60
60
60
60
60
60
Males
2006
63
64
61.5
63
65
62
62.5
62
63
62
63
62
60.5
65
63
62
62
62
60
60
60
60
increase
3
4
1.5
3
5
2
2.5
2
3
2
3
2
0.5
5
3
2
2
2
-
1989
55
55
55
55
55
55
55
55
55
53
55
55
55
55
55
55
55
55
55
55
55
55
Females
2006
58.5
59
59.66
59.5
60
60.5
60
57
57.75
55.25
58
57
60.5
60
58
57.66
57
57
55
55
55
55
increase
3.5
4
4.66
4.5
5
5.5
5
2
2.75
2.25
3
2
5.5
5
3
2.66
2
2
-
Third, the huge gap in life expectancy at birth between Ukraine and EU countries
occurs mainly due to the extremely high premature death rate of the working age
population (especially men) that is related, particularly, to adverse production factors which
are harmful to employees’ health. Differences in the intensity of death of older people are
not so striking (Annex 10). As shown in Tables 2 and 3, time spent in retirement is not lower
in Ukraine and is even higher for women when compared to the majority of European
countries on account of Ukraine’s lower retirement age.
Therefore, retirement age needs additional economic and social grounding and may
not be related solely to life expectancy. The pension system’s financial capacity to ensure a
4
Social Security Programs Throughout the World (SSPTW) http://www.ilo.org/dyn/sesame/ifpses.socialdatabase
13
decent level of life for pensioners and an acceptable fiscal pressure on payers of pension
contributions and taxes is extremely important.
Life Expectancy at Birth or at the Time of Retirement? 5
Even though life expectancy at birth is low in Ukraine, especially for men, this
argument is unacceptable when evaluating the possibility of increasing retirement age,
particularly, for women. For this purpose we need to consider the life expectancy at the
time of retirement, since this is precisely the figure which will show how long a person in
this age group will, on average, stay retired and therefore need to be paid a pension. It is
necessary to consider life expectancy at the time of retirement, since this shows how long a
person will be retired for. For example, in Ukraine life expectancy at retirement age (60
years) for males is equal to 14 years. This is similar to other countries. For Ukrainian women
at retirement age (55 years) life expectancy is equal to 25 years. This is higher than life
expectancy at retirement age in many countries around the world where retirement age is
about 60-65 years. For Great Britain – life expectancy at the retirement age is 23 years, Italy –
24.9, Germany – 20.9, Poland – 22, Slovakia – 18, the USA – 17.7, Hungary – 20, France – 26,
Czech Republic – 19.2, Sweden – 20, and Japan – 23). Therefore, women in Ukraine work
less than women in other countries and stay retired longer (Table 2).
Table 2. Life Expectancy at the Age of Retirement
Countries
Official retirement age set in the
country men/women
Duration of life
Great Britain
Italy
Germany
Poland
Slovakia
the USA
Hungary
Men
65
65
65
65
62
67
62
Women
60
60
65
60
62
67
61
Men
15.7
16.9
16.8
14
15
15.2
16
Women
23
24.9
20.9
22
18
17.7
20
Ukraine
France
Czech Republic
Sweden
Japan
60
60
63
65
65
55
60
63
65
65
14/12**
20
15.9
17.4
18.2
25 /19*/16**
26
19.2
20
23
* Life expectancy at the age of 60 for women in Ukraine, ** life expectancy at the age of 65 for men
and women in Ukraine6.
Comparison of the Period of Staying Retired and Labor Activity
The relationship between the time in retirement and the time in the labor force is 3.5
years for every 10 years of labor for men (England – 3.5, Hungary – 3.8, Germany – 3.7, Italy –
3.8, Poland – 3.1, Slovakia – 3.6, the USA – 3.2, the Czech Republic – 3.7, Sweden – 3.9, and
Japan – 4). For women the figure is 7.1 years, which is higher than in other countries
5
Expert Note of the Blue Ribbon Analytical and Advisory Centre (UNDP/EU) “Problems of Rising Retirement Age in
Ukraine” http://brc.undp.org.ua/img/publications/Expert_note_RaisingPensionAge_full.pdf
Analytical Note of the Blue Ribbon Analytical and Advisory Centre (UNDP/EU) Life expectancy at official retirement
age, deductions for pension provision, and retirement age increase in various countries of the world prepared at the
request of the Ministry of Labour and Social Policy of Ukraine
http://brc.undp.org.ua/img/publications/Reirement%20age%20and%20crisis.pdf
6
United Nations, Demographic Yearbook, World Bank, Eurostat, author calculations
14
(England – 5.8, Hungary – 4.9, Germany – 4.6, Italy – 6.2, Poland – 5.5, Slovakia – 4.3, the USA
– 3.8, the Czech Republic – 4.5, Sweden – 4.4, and Japan – 5.1) (Table 3). Ukrainian women
hold the world record in duration of being retired compared to their working life.
Table 3. Ratio of Tme in Retirement to Time in the Workforce
Country
The
beginning
of labor
activities,
years of
age
Retirement
age, years
Period of
labor
activities,
years
Period of
being retired,
years
Period of being
retired
calculated per
10 years of
labor activities
Great Britain
Italy
20
20
M
65
65
F
60
60
M
45
45
F
40
40
M
15.7
16.9
F
23
24.9
M
3.5
3.8
F
5.8
6.2
Germany
20
65
65
45
45
16.8
20.9
3.7
4.6
Poland
20
65
60
45
40
14
22
3.1
5.5
Slovakia
20
62
62
42
42
15
18
3.6
4.3
the USA
20
67
67
47
47
15.2
17.7
3.2
3.8
Hungary
20
62
61
42
41
16
20
3.8
4.9
Ukraine
France
20
20
60
60
55
60
40
40
35
40
14
20
25
26
3,5
5.0
7,1
6.5
Czech Republic
20
63
63
43
43
15.9
19.2
3.7
4.5
Sweden
20
65
65
45
45
17.4
20
3.9
4.4
Japan
20
65
65
45
45
18.2
23
4.0
5.1
Source: calculations of the EU/UNDP BRAAC experts
Pension Expenditures in Ukraine
Even though improving the Pension Fund of Ukraine’s financial standing was stated as
one of the objectives of pension reform, the only result to date is a significant increase in
pension expenditures (Figure 4). Pension expenditure levels did not exceed 9-10% of GDP
prior to 2004. After the reform started, the percentage increased to 13-14%. In 2007 the
percentage was 13.9% of GDP and in 2008 – 15.8%. No measures were taken to increase the
revenues of the pension system, except some increases in the size of the employer
contribution rate and several attempts to force entrepreneurs (natural persons) to pay at
least the minimum pension contribution. The share of Ukraine’s pension expenditures as a
percentage of GDP reached a record high level of over 18% in 2009, since no expenditure
items were decreased or canceled and GDP sharply decreased due to the economic crisis.
Figure 4. Share of Pension Expenditures as a Percentage of Ukraine’s GDP
Source: State Committee of Statistics of Ukraine, Pension Fund of Ukraine
15
The scale of Ukraine’s pension expenditures has reached a critical level in relation to
the capacity of the public finance system and the economy. Ukraine has one of the highest
rates of pension expenditures as a percentage of GDP among European countries (Figure 5,
Annex 6).
Overall, the share of pension expenditures as a percentage of GDP was equal to 11.8%
in the EU-27 in 2007 and to 12% in the “old” Europe countries (EU-15). Such countries as Italy,
Austria, France, Portugal, Germany, Switzerland, and Greece had similar percentages to
Ukraine but the demographic load on the pension system indicators were also much higher
for those countries when compared to Ukraine. Pension expenditures do not exceed 10% of
GDP in most Post-Socialist countries of Central and Eastern Europe.
Figure 5. Pension Expenditures as % of GDP in Ukraine and the EU Countries, 2007
Source: State Committee of Statistics of Ukraine, Eurostat
The Law of Ukraine “On Setting the Subsistence Wage and Minimum Wage”, passed in
October 2009 sets new challenges for the pension system’s financial capacity. As the 2005
experience shows, a sharp increase in the minimum pension surely will be accompanied by a
deficit in the Pension Fund’s own resources. Therefore, the burden of the additional pension
obligations will be passed to the State Budget. The situation will be complicated by
uncertain wage dynamics when compared to 2005 – a consequence of the world’s financial
and economic crisis. Pension expenditures for 2010 are forecasted as 17% of GDP. Increasing
retirement age is the least painful and most efficient way of minimizing pension
expenditures and, most importantly, a well-tried practice used by many countries with a
similar situation.
Consequences of the Demographic Situation on Ukraine’s Pension
System
Considering the unavoidable nature of the demographic aging process, the Ukrainian
population does not have a wide choice of options for developing its pension system. The
choice really is what are we going to “sacrifice”.
Option 1: leave the pension contribution (35.2% of the payroll) and the size of the
budget subsidies unchanged. Then the replacement rate of earnings to pensions (from the
insurance part) will decrease from the current 40% to 35% in 2025 and to 28% in 2050
16
(Table 4). In other words, this will result in decreased standards of living for pensioners and
the widening of their poverty when compared to the average income of the population.
Option 2: maintain the replacement rate (ratio of the average pension to the average
wage which was equal to 40%) and size of subsidies at the current level, with the deficit of
the Pension Fund to be covered by an increase in the pension contribution rate. Ukraine
already has one of the highest contribution rates in Europe – an aggregate 35.2% for
employers and employees. If this option was chosen the size of the pension contribution
would have to rise to 40% in 2025 and to 50% in 2050. Increasing the fiscal burden on
wages may result in an increase in the informal economy in respect of labor and
remuneration relationships. Increased employee contribution rates will lead to a decrease in
their wages.
Option 3: leave unchanged the size of the pension contribution and replacement rate.
This means the Pension Fund’s deficit would have to be covered through increased subsidies
from the State Budget. This would lead to continuous, progressively rising increases in the
State’s pension obligations. Funds from the State Budget amounted to approximately 30% of
the Pension Fund’s total revenues in 2009, one-third of which was directed at covering the
deficit in the insured (solidarity) part, while the remainder was directed at financing the
different additional pension programs which are financed at the expense of the State Budget
in accordance with the legislation (Annex 5).
Table 4. Forecast of Development Options for the Pension System of Ukraine 7
Consequences
2009 2010 2015 2020 2025 2030 2035 2040 2045 2050
Option 1: Preserving an unchanged pension contribution rate (35,2%) and deficit-free budget of
the Pension Fund
Replacement rate8, %
40
40
39
37
35
34
33
32
30
28
Option 2: Preserving a replacement rate of 40% and the budget of the Pension Fund being deficit
free
Size of pension contribution, %9 35.2
35.2
35.8
38.3
40.1
41.4
42.5
44.5
47.4
50.0
Option 3: Preserving an unchanged pension contribution rate and an unchanged replacement
rate with the State budget covering the deficit
Coverage of the PFU deficit from the State Budget10, %
-
2
8
12
15
17
21
26
30
Source: calculations of the author
Even though some items of state pension expenditure will gradually disappear due to
a natural decrease in the number of recipients (for example, payments foreseen by the Laws
“On Status and Social Protection of Population Suffering from the Chornobyl Catastrophe”,
“On Status of War Veterans, Guarantees of Their Social Protection”, “On Rehabilitation of
7
Presence of privileges and arrears in payment of a pension contribution was ignored during the calculations.
Relationships between insurance part of pension and wage. It is calculated as size of pension contribution (32.5%) divided by the
forecasted ratio of the number of pensioners to the number of the contributions’ payers during the Choice 1 modeling.
9
It is calculated as ratio of the number of pensioners to the number of contributions’ payers multiplied by the reproduction rate
(40%) during the Choice 2 modeling.
10
Over subsidies for additional pension programs and is determined as % to total PFU expenditures. Under condition of the Choice
3 it is calculated as the difference between desired 40% reproduction rate and reproduction rate possible under condition of the
Choice 1 and divided by 40% (i.e. divided by desired reproduction rate level).
8
17
Victims of Political Repressions in Ukraine”, “On Victims of Nazi Persecution”, and “On Social
Protection of War-Affected Children”) this will not happen earlier than 2025. Even in cases
where some payment categories disappear this will not necessarily mean a narrowing of
budget expenditures, since new ones continuously appear (the latest example is adoption of
the Law of Ukraine “On Raising the Prestige of Miners’ Work”). In other words, the size of
State pension obligations, which should be financed by State Budget funds is extremely high
and decreases in inflows of pension contributions will significantly increase this burden.
Even now, despite the crisis and unstable wage dynamics, pension payments are
covered by contributions to 80% of the amounts prescribed in accordance with the Law of
Ukraine “On Mandatory State Pension Insurance” (except for contributions there are also
some other items of the Pension Fund’s own revenues). However, the size of the uncovered
deficit in this area amounted to 8% of all Pension Fund payments in 2009. If the deficit of the
insurance pension (solidarity) system, which is also related to the increase in the
demographic load, continues to be compensated by the State Budget, then the State Budget
subsidy would substitute 12% of the necessary pension contributions in 2025 and 30% in
2050. Total expenditure of the Pension Fund is over half the total size of expenditures of the
consolidated budget of Ukraine. Therefore, the question arises whether the Ukrainian
budget is able to commit to such a serious part of pension insurance obligations and what
would be the consequences for financing other social items (education, healthcare, culture,
and social assistance to low-income individuals and families with children etc.). Obviously
this option is also unacceptable.
Option 4: Raising retirement age in accord with the general trend of the population’s
aging is absolutely natural and the most appropriate step. Increased retirement age has a
complex influence on improving the pension system’s financial capacity, since it allows for a
simultaneous decrease in expenditures (the number of pension recipients decreases or at
least its growth rate slows) whilst increasing incomes (the period of labor activity is
prolonged and the number of the employed and contribution payers increases). The
increased flow of contributions due to a lower number of beneficiaries provides the
possibility of increasing pensions for existing pensioners, whilst prolonging the period of
pensionable service means enhanced pension rights for a future generation of pensioners.
18
Box 1 Demographic Forecast for Ukraine by 2050
Low Birth Rate. Ukraine has one of the lowest birth rates in Europe (and the world in
general) (Figure 6, Annex 1). State efforts to stimulate child-bearing, particularly establishing
high allowances for child birth and higher amounts for more than one child have had some
effect. The aggregate birth rate increased to 1.35 in 2007 and to 1.46 in 2008. But as a practice
shows, the effect of monetary stimuli soon wears off and the indicators achieved are well
below those necessary for maintaining population numbers.
Figure 6. Total Birth Rate in Ukraine and other European Countries, 200811
Source: State Committee of Statistics of Ukraine, Eurostat
Overall, experts do not predict a return to increased reproduction. Particularly, one of the
latest forecasts from Eurostat (EUROPOP 2008) foresees variations in the aggregate birth rate in
EU countries of 1.5-1.9 children on average in 2060 and for the EU-27 of 1.6812. According to the
average (and the most probable) forecast of the Institute of Demography and Social Studies of
the National Academy of Sciences of Ukraine, the birth rate in Ukraine will be 1.6 children over
the long-term (in 2050) 13. UN experts are more optimistic on this issue: under their hypothesis,
the aggregate birth rate in Ukraine should reach 1.85 children per woman by 205014 (Annex 2).
Increased Duration of Education. The number of students in III-IV level higher
educational institutions increased 2.7 times and has reached 2.4 million in the period since
independence. The full educational cycle in these institutions is usually equal to 6 years (4 years
of studies for a Bachelor’s Degree and 2 years for a Master’s Degree), while the Soviet higher
education system foresaw 4-5 years of studies. Among newly accepted students of higher
educational institutions approximately 70% are graduates from general secondary educational
institutions of the correspondent year. In other words, at least 2 out of 3 school graduates
continue their education by obtaining higher education15. Wide-spread higher education and
traditional attitudes to education as to the main type of activities both condition the low level
of employment among Ukrainian youth. According to data from the 2008 survey of the
11
Average number of children which may be born by a woman during her life under existing birthrate through age groups
Konstantinos Giannakouris. Aging characterises the demographic perspectives of the European societies / Eurostat, Statistics in
focus, 72/2008
13
Complex Demographic Forecast for Ukraine for the Period by 2050, Adjusted in Accordance with the 2009 Data / Institute of
Demography and Social Studies of NAS of Ukraine http://www.idss.org.ua/public.html
14
Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population
Prospects: The 2008 Revision, http://esa.un.org/unpp
15
Major Indicators of Activities of the Higher Educational Institutions of Ukraine as of the Beginning of the 2008/09 Academic
Year: Statistical Bulletin. – К. State Committee of Statistics of Ukraine, 2009.
12
19
population’s economic activity conducted by the State Committee of Statistics using standards
of the International Labor Organization, the employment level of 15-19 year olds was 13.9%
and among 20-24 years old was 56.9%16. In other words, the vast majority of young people
start working after reaching age 20.
The period of education will soon increase due to finalization of the general secondary
education system into a 12-year education cycle. In other words, entry to the labor market will
be further postponed (at least until to age 22).
Increased Life Expectancy. The absence of positive dynamics in life expectancy during
the last 20 years is a major feature of the demographic crisis in Ukraine. Life expectancy at birth
remains around 74 years for women and 63 years for men. This is the lowest indicator in
Europe, the situation is worse only in the Russian Federation (Annex 3).
Life expectancy in EU countries for women grew on average by 2 years and for men by 3
years over the last 10 years. Overall, among the EU-27 countries, this indicator is now 82 for
women (for the EU-15 it is 83.3) and 75.8 years for men (for EU-15 – 77.4 years of age). The
Eurostat EUROPOP 2008 forecast for the EU-27 foresees an increase in life expectancy at birth
for women to an average of 89 years of age and for men 84.5 years of age by 206017.
As for Ukraine, international and national demographers agree that the stagnating life
expectancy should finally be replaced with positive dynamics (Annex 2). UN experts forecast a
gradual increase in life expectancy at birth to 78.8 years for women and 71.3 years for men by
205018. Hypotheses of the most probable forecasted scenario of the Institute of Demography
and Social Studies of the National Academy of Sciences of Ukraine are also close to these
numbers: 78.2 years for women and 71.0 years for men by 205019. In other words Ukraine will
just approximate to the current average levels of life expectancy in the EU by 2050.
Progress in the Process of Population’s Aging. A combination of low birth rate and
increasing life expectancy means that an aging population will be the general demographic
trend at least over the next half of the century. This tendency becomes global and demands an
adaptation of the economy and the social sphere to the specifics of an “old population”,
especially in relation to the pension system.
The level of aging, determined by the share of those 65 years and older in the general
population of a country according the ILO methodology, will increase from the current 17.1%
to 28.8% in the EU-27 in 2050 according to data from EUROPOP 2008 (Figure 7). Due to higher
mortality and a slower increase in life expectancy, the share of that age group will be lower in
Ukraine: 16.3% in 2008 and 24.7% in 2050 (according to the forecast of the Institute of
Demography and Social Studies of the National Academy of Sciences of Ukraine – 23.8%).
Due to the gradual diminishing of generations entering into the work force (the 15-64
age group is also attributed to the work force in the EU), the load on the elderly will grow at an
accelerated rate. The ratio of persons 65 and older to those 15-64 years in the EU-27 will
double from the present 25.4% to 50.4% (Figure 8, Annex 4) by 2050. In other words, if there
are now four people aged 15-64 for every individual aged 65 and over then by 2050 there will
be just two. This ratio in Ukraine will increase from the current 23.3% to 38.2% (or 38.7%
according to the IDSS forecast).
16
Economic Activities of Ukrainian Population in 2008: Statistical Digest. – К.: State Committee of Statistics of Ukraine, 2009. –
p.45.
17
Konstantinos Giannakouris. Ageing characterises the demographic perspectives of the European societies / Eurostat, Statistics
in focus, 72/2008
18
Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population
Prospects: The 2008 Revision, http://esa.un.org/unpp
19
Complex Demographic Forecast for Ukraine for the Period by 2050, Adjusted in Accordance with the 2009 Data / Institute of
Demography and Social Studies of NAS of Ukraine http://www.idss.org.ua/public.html
20
Figure 7. Share of People 65 Years and Over in Ukraine and European Countries, 2008 and
Forecast for 2050, %20
Therefore, the average European level of population aging is observed in Ukraine,
whilst in 2050 Ukraine will be one of the “youngest” countries in Europe (based on
comparing the share of the 65-years old age group within the population with other
countries). This is explained, by the gap in the increased life expectancy rates (in some way
differences in the forecast hypotheses and methodology applied by Eurostat, UN, and IDSS
influence the result but the impact is not vital).
Figure 8. Ratio of Those 65 Years and Older and Those 15-64 Years of Age in Ukraine and
Other European Countries, 2008 and Forecast for 2050, % 21
The aging of the Ukrainian population (the number of persons of retirement age) in
accordance with the current retirement age (55 for women and 60 for men) looks much
more dramatic: the share of retirement age persons (the effective age for Ukraine) was
equal to 26% of population in 2009 and it will be equal to 29% in 2021 and 38% in 2050.
For the pension system this means that there are currently 4 persons of retirement age
for every 10 of working age. By 2050 this number will be approximately 8 (Figure 9). The
percentage will increase even more quickly from the second half of 2030’s, when the larger
numbers in born in the 1980’s start to retire. Here we see an illustration of the situation
where the State policy of actively stimulating the birth rate creates artificial demographic
20
Konstantinos Giannakouris. Ageing characterises the demographic perspectives of the European societies / Eurostat, Statistics
in focus, 72/2008; Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat,
World Population Prospects: The 2008 Revision, http://esa.un.org/unpp
21
Konstantinos Giannakouris. Ageing characterises the demographic perspectives of the European societies / Eurostat, Statistics
in focus, 72/2008; Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat,
World Population Prospects: The 2008 Revision, http://esa.un.org/unpp
21
waves which do not solve but, even make worse the problems of stabilizing the natural
population reproduction processes. Progressive aging of the population causes an
inevitable increase in the demographic load on the working age population if the
effective retirement age remains unchanged.
Figure 9. Forecast of the Ratio of Retired Persons to Working Age People in Ukraine by 2050
Based on Current Retirement Age %
Source: Complex Demographic Forecast for Ukraine for the Period by 2050, Adjusted in Accordance with the 2009 Data
/ Institute of Demography and Social Studies of NAS of Ukraine, http://www.idss.org.ua/public.htm
Impact of the Labor Market on the Prospects for Developing the Pension System. The
Challenge for the national pension system, related to the demographic aging processes, are
even more acute when the situation with the population’s employment opportunities are
considered. Even though the overall employment level of 15-64 years old in Ukraine is close
to the European average – 63% against 64% on average in the EU-27, a significant part of
employed persons work in personal agricultural enterprises (around 2 million persons or 10%
of the employed population in 2008). This is not common in EU countries. The employment
level of the Ukrainian population aged 15-64 years is extremely low compared to the
majority of European countries – just 57% (Figure 10) – when employment in personal
agricultural enterprises is not taken into account.
Figure 10. Employment Level of the Population Aged 15-64 Years in Ukraine and EU
Countries in 2008, %
Source: State Committee of Statistics of Ukraine, Eurostat
Due to the spread of other informal employment types, the number of persons paying
pension contributions is only 77% of the total number of the employed (15.5 million people
according to the data of the Pension Fund of Ukraine).
22
2. Modeling and Choosing the Optimal Option for Increasing
Ukraine’s Retirement Age
Choosing the optimal option for reforming the effective retirement age should take
into account the priorities for the general strategy for social and economic reforms, i.e. not
just pension reform but also reforms in other spheres, particularly the restructuring of
production and employment, modernization of the healthcare system, etc.
Necessity of Equalizing Retirement Age for Men and Women
We consider, first of all, increasing the retirement age for women to the same level as
set men – 60 – the key issue associated with revising the retirement age. It is worth stressing
that currently in Ukraine there are no objective physiological, economic or social grounds for
maintaining a lower retirement age for women. The existing 5-year difference between the
retirement age and duration of pensionable service for women and men is socially unfair and
contradicts the insurance principles, since women gain rights to retirement and to receiving
the minimum pension (which is irrespective of gender) whilst making a significantly reduced
labor contribution.
A lower retirement age and, consequentially reduced periods of contributory service,
lead to lower pensions for women. This became especially notable in 2008 after the increase
in value of each year of pensionable service year from 1% to 1.35%. The average woman’s
pension is equal to 67% of a man’s, while the ratio of their average wage sizes is 75%. In
other words, a lower retirement age for women is not just an ungrounded privilege but also
causes them poverty in their old age. Establishing equal retirement ages will facilitate not
just the leveling of pensions for women and men (their ratio will correspond to the gender
ratio in remuneration) but will also increase the income of the old age people as a whole
since almost 70% of old age pensioners are women.
Therefore, establishing a single retirement age threshold and consequentially a
comparable pensionable service for women and men is necessary not only, and not just for,
improving the financial situation in the Pension Fund but also for ensuring real gender
equality in labor and pension rights and enhancing opportunities for the development and
realization of the human potential of the Ukrainian population (including its labor potential).
Therefore, the first stage of increasing retirement age should be equalization of male
and female retirement ages. The second stage should concern both women and men and
should be directed at establishing a retirement age consistent with that common in
European countries – 65 or at least 62 years of age.
Methods for Increasing the Retirement Age
Increasing retirement age could be implemented in three different ways depending on
the speed and time of its introduction:
¾ fast transfer, when introduction of the new retirement line is set for a particular
calendar date soon after taking the decision to increase retirement age. This
would be a radical way to stop the increase in the number of the old age
pensioners, since pensions of this type will not be granted for some period of
time (depending on the number of years during which the retirement age will be
increasing);
¾ gradual transfer, when the increased retirement age is realized in stages in
accordance with a prescribed timetable based on the year of birth and for each
subsequent age group the retirement age increases by relatively small
23
increments (by three or six months depending on the chosen speed of increase).
This allows for decreasing the number of newly retired old age pensioners and
improving the situation with those pre-retirement age who can prepare for their
retirement;
¾ postponed transfer, when introduction of the new retirement age is postponed
into the future, i.e. the date of its introduction is in the distant future after the
date of taking the decision (by 10-20 and more years). In this case the new
retirement age impacts those who at the time of taking the decision were at an
earlier stage of their working careers and does not impact those close to
retirement.
Each of these has their advantages and disadvantages. Comparison of their influence
on the indicators of load and financial capacity allows modeling of the parameters of the
pension system (the calculation results are presented in Annex 11).
Modeling Options for Increasing the Retirement Age for Women to 60
Increasing the retirement age for women to 60 may be realized in one of three ways:
1. establishing the age at 60 immediately in 2012 (radical option);
2. gradually increasing the retirement age for women by six months each year,
starting in 2012 (thereby reaching 60 in 2021);
3. setting 60 as the retirement age in 2021 (postponed option).
Distinctive Feature of the Rapid Option. Introducing 60 as the retirement age for
women in 2012 would not be retroactive for women reaching retirement age prior to 2011.
In other words, women who became 55-59 years old prior to the beginning of 2012 may not
be included in the working age population, since they already had a right to an old age
pension. Actually, even the radical option for increasing the retirement age foresees a
gradual redistribution of those from 55-59 years from pensioner to contributor. In this case
the “speed” of transfer is equal to one year per annum: women aged 55 years old remain in
the working age population cohort in 2012, while in 2013 – 56 years old women, in 2014 –
57 years old women, in 2015 – 58 years old women, and in 2016 – 59 years old women
(finish of the redistribution).
Figure 11. Forecast of the Number of Working Age Population Depending on the Option for
Increasing Female Retirement Age to 60, million people
Source: calculations of the author
Forecast of the Number of the Working Age Population. In the first year of the rapid
increase option the increase in the working age population will be 400,000 compared to
there being no change. In 2016 the difference would be 1.9 million people. Moreover, the
24
absolute increase in this cohort will be 140,000 during 2012-2016, while under unchanged
conditions it will decrease by 1.4 million (Figure 11). However, the number of working age
people will start to decrease again after 2016, when the redistribution of cohorts under the
new retirement age would be completed (even though this number will still be significantly
higher in comparison with the case of an unchanged retirement age).
Gradual transfer to age 60 for women at the rate of six months a year. Even though
this does not stop the trend, it significantly slows down the diminishing size of the working
age population. This trend looks like a smooth, almost straight line during the transfer
period. This is also important for the pension system’s stability.
A postponed transfer allows a sharp increase in the number of working age people in
the medium-term period but it will continuously decrease until that time.
Regardless of the method of implementation, increasing the retirement age ensures a
significant increase in the working age population in the long-term perspective when
compared to leaving retirement age unchanged – by 1.6 million people (by 6.9%) in 2021
and by 1.3 million people (by 7.6%) in 2050.
Forecast of the Ratio of the Retirement Age and Working Age Population. The
dynamics of the retired population and the ratio of the retired and working age population
mirror the dynamics of the working population cohort (Figure 12). A rapid increase in
retirement age provides an opportunity to immediately and significantly decrease the
demographic load but after 2016 the load will recover very quickly. A gradual increase
ensures maintaining the load at almost a constant level, while the postponed increasing
option allows its rapid decreasing within the determined time period.
Figure 12. Forecast of the Ratio of Retired People to Working Age People According to the
Options for Increasing Female Retirement Age to 60
Source: calculations of the author
The ratio of the number of retired age people to working age people will remain at the present
level (40%) in 2021 thanks to an increase in female retirement age by 5 years, while in case of
unchanged retirement age it will reach the 50% level. After the increase in retirement age is
completed the ratio will start increasing, particularly quickly from 2035. But the ”contribution” of the
retirement age increase to softening the demographic load will be significant henceforth: the ratio of
the number of retired age people to working age people will be 64% in 2050 - 12 percentage points
lower than if there is no change in retirement age.
Changes in demographic indicators due to increased retirement age to a large extent
determine the dynamics of the pension system parameters (especially concerning the
25
number of old age pensioners) but one should also take into account the influence of some
other factors (particularly, the population’s economic activity level).
Forecasted Number of Old Age Pensioners. The radical option allows a rapid decrease
in the number of old age pensioners (but only for some period of time), since the number
will not be added to by women for five consecutive years (Figure 13). Thanks to this, the
number of the old age pensioners could be 1.6 million (15%) lower in 2016 than if female
retirement age remains unchanged. However, the number of pensioners will start to increase
significantly again after 2016 when women will again start to retire. This is related to the fact
that the new retirement age will start to be reached by a significant number of women born
in the second half of the 1950’s.
Figure 13. Forecasted Number of Old Age Pensioners Depending on the Chosen Option for
Increasing Female Retirement Age to 60 Years, Million People
Source: calculations of the author
Approximately the same situation, but with a corresponding time lag, will be observed
if the postponed option for increasing retirement age is adopted. The difference is in the
fact that there will be no “compensatory” increase in the number of pensioners, since a
smaller number of people born in the second half of the 1960’s will retire and they will retire
later. However, the number of pensioners will grow without any barriers for the next ten
years.
The gradual option, even though taking twice as long as the radical one, allows an
immediate and significant decrease in the number of the old age pensioners and covers
almost the whole “dangerous” period since the number of pensioners after the transfer to
the 60-year retirement threshold remains stable for a long time.
When studying the possible increase in retirement age, one should consider that an
increase in the number disability pensioners is a “collateral” effect of this measure. Being
unable to obtain an old age pension will induce pre-retirement age contributors having
health problems to apply for a disability pension. Therefore, the decrease in the general
number of pensioners will not correspond to the decrease in the number in the old age
pensioners.
Forecast of the Labor Force. Of course, not all people who are supposed to be covered
by the retirement age increase will continue to work and pay pension contributions. Their
economic activity level due to inertia will be lower than that which pre-retirement age
people had under the old retirement age – there is no sense to expect that 55-59 year old
26
women will have the same labor force participation level in 2021 as 50-54 year old women
have today. Postponement of the prospect of retirement will stimulate some increase in the
economic activity level of 50-54 year old women people in comparison to the present level.
However, economic activity of retirement age women (under the new age limit) will, most
likely, remain unchanged, since this generation will manage, to a greater extent, to realize
their labor potential thanks to an increase in the working age period.
For example, if the activity level of the new pre-retirement stratum (the last year prior
to retirement under the new age limit) will be on average 25% higher in case of the gradual
retirement age increase than the one prior to the changes, the level of labor force
participation by women of 55 years of age will be equal to 64% in 2021 and to 52% for 59
years old women (Figure 14).
Figure 14. Modelling the Level of Economic Activity of 50-59 Years Old Women Under a
Gradual Increase in Retirement to Age 60 Years (by Half a Year per Annum)
Source: calculations of the author
A similar situation will be observed with the rapid and postponed options for
increasing retirement age but the initial growth rates of economic activities will be
significantly higher, not only because of faster attraction of 55-59 year old women to the
labor market but also because of a “burst” of economic activity by 50-54 year old women for
whom the prospect of old age retirement will be postponed by five years (Figure 15).
Figure 15. Modeling the Level of Economic Activity of 50-59 Year Old Women Under the
Rapid and Delayed Options for Increasing Female Retirement to 60.
Source: calculations of the author
27
Correspondingly an effective increase in the volume of the labor force, once the
chosen increase in retirement age is implemented, will depend on the rate of increase in the
level of female economic activity. The “rapid” increase will “mobilize” an additional
200,000 women into the labor market in 2012 and 600,000 in 2016 (Figure 16) compared
to the situation where the retirement age is unchanged. The gain during the same period
would be approximately half as much under the gradual increase option (by half a year per
annum). The labor supply will be 500,000 greater in 2021 than if there was no change in
retirement age (20.9 million people against 20.4 million people) and the size of this
additional supply will remain constant during the whole forecast period.
Figure 16. Forecast of the Economically Active Population According to Different Options for
Increasing Female Retirement Age to 60, million people
Source: calculations of the author
The number of the contributors will be 360,000 higher in 2021 (if unemployment
stabilizes at a level close to the natural level) than if retirement age were unchanged.
The average duration of female pensionable service should increase to at least 36
years in 2021 (it is 33 years now) and the period of pension payments (i.e. life expectancy at
retirement) should decrease from 25 years to 21 years due to the increased retirement age.
Forecast of the Ratio of Pensioners to Contributors. It should be clear that increasing
retirement age to some extent reduces the aging processes’ pressure on the pension system
only for some time. As the modeling results show, the load of pensioners on contributors
starts to grow immediately after complete implementation of the new retirement age and
people start to retire bodily regardless of what option for the increase was chosen (Figure
17). However, increasing female retirement age by 5 years will decrease the overall load from
97% to 87% in 2021 and move the critical date, when the number of pensioners exceeds
the number of the contributors from 2025 to 2039.
Conclusion Concerning the Best Option for Increasing Retirement Age. As
comparison of the different options for increasing retirement age suggests, a gradual
transfer seems to be the best choice. It immediately ensures a significant decrease in the
load on contributors and allows a smoother change in trends after reaching the new
retirement age limit.
28
Figure 17. Forecast of the Ratio of Pensioners to Contributors According to the Options for
Increasing Female Retirement Age to 60
Source: calculations of the author
The fact that the gradual option is significantly softer in relation to the women who
will be impacted by the revised retirement age line is also important for the public’s support
of pension reform. The radical option would have a significantly greater negative reaction. Its
application would be justified in the case of an extremely large deficit in the pension system
(for example, due to the establishment of the accumulation system) and only if the
population understood the need for some “sacrifice”. But if one considers this as
compensation for some share of contributions lost by the solidarity system due to
establishing the accumulation system, the question arises as whether or not it is fair to ask
for such a sacrifice by those who will definitely not participate in the accumulation system?
Obviously, the option of gradually increasing retirement age is the most reasonable
and fair one. In addition, it opens the possibility of a permanent increase in retirement age to
that in European countries – 62-65 years of age regardless of gender. During the 10 years of
the gradual increase in female retirement age it would be possible to implement the
necessary measures for production and employment restructuring which would improve
working conditions and reduce the high mortality rate among working age men.
Modeling of Options to Increase Male and Female Retirement Age to
62-65
A permanent increase in male and female retirement age to 65 or at least 62 would
allow the continued and even strengthened (thanks to including men in the process) trend
of moderating the load on the pension system. If retirement age was increased by six months
every year, the 62-year retirement age threshold would be reached in 2025 and the 65-year
threshold in 2031.
Forecast of the Working Age Population. Increasing retirement age for both genders
from 2022 provides an opportunity to not just slow down the rate of decrease in the working
age cohort but also to reverse its upwards trend for some time (Figure 18). The number of
the working age persons would be 25.4 million people in 2025 if retirement age rises to 62.
This is 300,000 higher than the number in 2021 (where only equalizing retirement age at 60
would occur) and 2.6 million people higher if there was no change in retirement age.
Continuing to increase the retirement age to 65 would ensure an absolute growth in
the working age population in 2031 by 900,000 people if compared with 2025 and by 4.1
million people if there was no change in the retirement age.
29
The working age cohort starts to decrease again after the increase in retirement age is
fully implemented. But its number will be much higher in 2050 compared to a situation
where nothing changes – 2.5 million people more (14.4%) if retirement age is 62 and by 4.4
million more if retirement age becomes 65.
Figure 18. Forecast Number of Working Age People According to Different Options for
Increasing the Retirement Age, million people
Source: calculations of the author
Forecast of the Ratio of Persons of Retirement Age to those of Working Age. A
significant decrease in the demographic load on the pension system is an extremely
important outcome of the second stage of increasing retirement age (Figure 19). The first
stage – gender equalization – provides an opportunity to stop the increase in the ratio of
retirement age persons to working age persons for a particular period. A further increase in
retirement age for women and men would decrease the ratio to 36% in 2025 (if retirement
was at 62) and to 30% in 2031 (if retirement was 65). In the later case the increase in the load
significantly slows down once the growth in the retirement age finishes. The load reaches
the existing level just at the end of the forecast period. If retirement age was unchanged the
load would reach 76% in 2050 and if retirement age was increased only for women to 60, it
would reach 64%.
Figure 19. Forecast of the Number of People of Retirement Age to Those of Working Age
under Different Scenarios for Increasing the Retirement Age, %
Source: calculations of the author
Forecast of Number of Old Age Pensioners. Increasing the retirement age for women
and men would ensure that in 2025 (when retirement age for both was 62) there would be a
decrease in the number of old age pensioners by 2.2 million people (by 19.7%) as opposed to
the number if there was no change in retirement age. If retirement age was increased to 65,
30
the decrease in the number of the old age pensioners would amount to 3.5 million people
(31.8%) in 2031 (Figure 20).
The number of old age pensioners will start to rise again once there is full
implementation of the retirement age increase. However, it will be significantly less than in
the case of any other option at the end of forecast period: 8.0 million people against 11.4
million people if there are no changes in the retirement age, 10.5 million if female retirement
age was increased to 60 and 9.5 million people if retirement age for both women and men
was increased to 62 years.
Figure 20. Forecast Number of Old Age Pensioners Under Different Scenarios for Increasing
the Retirement Age, %
Source: calculations of the author
Forecast of the Labor Force. Prolonging work will enhance the economic activity of
the 60-62/65 year old population and other age groups. This effect will be more notable
among women, since some inertia will be accumulated already at the first stage of the
retirement age increase. The economic activity level of the age groups which will be covered
by the increase will increase almost two fold and will be equal to around 50% and will
increase to 55% by the end of forecast period (Figure 21).
Figure 21. Modelling of the Level of Economic Activities of 59-64 Years Old Women Under
the Gradual Increase in Retirement Age to 65
Source: calculations of the author
The current level of economic activity for 50-59 and 60-64 year old men is
significantly higher than for women of the corresponding age due to different retirement
31
ages. Increasing retirement age for women and men will facilitate a levelling of the
economic activity indicators of these age groups. Therefore, the increase in the level of the
labor force participation which is related to increased retirement age will be not that sharp
for men: from current 31-40% to 48% when the new retirement age is met and 51-58% in
2050 (Figure 22).
Figure 22. Level of Economic Activity for 59-64 Year Old Men under a Gradual Increase in
Retirement Age to 65
Source: calculations of the author
Despite an optimistic scenario concerning the increase in the working age population
cohort and an increase in the economic activity level due to increased retirement age, labor
supply will sharply diminish even during 2022-2031 (Figure 23). If 62 is the retirement age,
the number of the economically active population will be to 20.5 million people in 2025. This
is 1.7 million less than at the moment. However, this is 800,000 more than if there is no
change in the retirement age and 400,000 more if there is only an increase in female
retirement age to 60.
Figure 23. Number of the Economically Active Population Depending Upon Options for
Increasing Retirement Age, million people
Source: calculations of the author
The size of the economically active population will be 20.2 million people in 2031, if the
retirement age for women and men is increased to 65. This is 1.2 million people more than in
if there is no change in the retirement age and 700,000 more than if only female retirement
age is increased to 60. The second stage of the retirement age increase creates conditions to
support the contribution payers’ cohort and to restrain the increase in the load on the
pension system.
Forecast of the Ratio of the Number of Pensioners to Contributors. As stated
previously the number of pensioners may equal the number of contributors in 2025 if there
32
are no changes to the retirement age. A gradual increase in female retirement age to 60
years postpones this to 2039. Increasing male and female retirement age to 62 years
contributes to a decrease in the ratio of pensioners to contributors by 16 percentage points
in 2025 as opposed to the scenario if there is no change. If there is no change equality
between the number of pensioners and contributors would occur in 2045 (Figure 24).
Figure 24. Ratio of Pensioners to Contributors Under Scenarios for Increasing Retirement
Age to 62-65, %
Source: calculations of the author
Extending retirement age for both women and men to 65 would decrease the
pensioners’ load on contributors to 79% in 2031 compared to 104% if there were no changes
and 95% if only female retirement age was increased to 60. In this scenario the point at
which the number of pensioners exceeded the number of contributors would be outside the
forecast period. The ratio of these cohorts would be equal to 97% in 2050, while if there was
no change in the retirement age it would be equal to 125% in that year. If only female
retirement age was increased to 60, it would be equal to 117%, and if the increase was for
both genders and to age 62, it would be equal to 109%.
Conclusion Concerning the Best Option for Increasing Retirement Age. Results of the
calculations show that a permanent increase in the retirement age at the speed of six
months per annum initially for women and, once retirement age for both sexes is equalized,
then to 65 prevents a dangerous increase in the load on the pension system over the next
forty years and maintains the ratio of pensioners to contributors at an even lower level than
it is now for a long period of time.
One more important issue for the adequacy and fairness of the pension reform is that
the increased retirement age leads to an increase in the pensionable service accrued during
a person’s working life. As stated previously, the current employment level within the official
sector is very low in Ukraine and the age of entry into the labor market is increasing. The
average duration of the pensionable service of new pensioners may decrease to 30 years for
women and 34 years for men if there was no change in retirement age, impacting the
generations born in 1970’s and 80’s. They started to work much later and their labor career
began at the time of the transition period’s crisis and the current economic realities. The
second stage of the retirement age increase will allow these indicators to be maintained at
the level of 34-35 years for women and 36-37 years for men.
33
Modeling the “Crisis Reduction” Option for Increasing Retirement Age
of Women and Men to 65
The crisis reduction option for increasing retirement age could be applied by taking
into account the extremely difficult situation with financing pension expenditures and the
absence of real opportunities to decrease their cost. The crisis reduction option foresees an
immediate (from 2011) increase in the retirement age for women and men to 65 years of
age at the rate of six months per annum. Under this option men would start to retire at 65
in 2020 and women would retire at 65 in 2030. Under this scenario gender leveling of the
retirement age would take place in 2030.
The simultaneous increase in the retirement age for both genders will have a much
larger effect in relation to counteracting the increase in the load on the pension system in
the short-term perspective (Figure 25). The ratio of pensioners to contributors would
decrease to 77% during 2011-2020, whereas if there was no change in the retirement age it
would reach 96% and in the case of a 2-stage retirement age increase 86%. The load will
start to increase slowly from 2021-2030, when the increase in retirement age will be realized
solely for women. In the case of a 2-stage increase, the ratio of pensioners to contributors will
decrease not so sharply but will decrease over a longer period of time (it will decrease more
during 2022-2031, when men would start to participate in the increased retirement age
process).
Figure 25. Forecast of the Ratio of Pensioners to Contributors Under Different Scenarios for
Increasing Retirement Age to 65, %
Source: calculations of the author
The crisis reduction option for increasing retirement age allows for a rapid decrease in
the pressure on the pension system and provides support to the system’s financial capacity.
At the same time, it is worth mentioning that the method of delayed retirement age
increasing, when new conditions are set for relatively young generations and do not impact
the pre-retirement age population, is very common in existing international world practice.
In Ukraine it may impact those who will be entitled to participate in the second pillar
(mandatory accumulation system) – changes in conditions for obtaining pension rights will
be so significantly different for them that increased retirement age (and correspondingly
longer period of pensionable service) will be compensated and balanced by having other
privileges, e.g. by the right to choose the type of pension benefits and their inheritance.
34
3. Assessing the Influence of Increased Retirement Age on Financial
and Other Economic Indicators
The positive effect of increased retirement age is not solely limited to the pension
system. This measure provides new opportunities for economic growth by solving (at least
partially) the problem of the labor force deficit and ensuring an increase in State budget
incomes and incomes of the public finance system in general (including funds of social
insurance).
Assessing the Influence of Increased Retirement Age on the Labor
Market
Labor supply and the number employed should significantly increase due to increased
retirement age and, therefore, a prolongation in the working age period. This is especially
relevant for Ukraine, which is significantly behind the EU in working conditions and
standards of life. It cannot count on a considerable inflow into the labor force from abroad.
The cumulative balance of external migration will be equal to +2.1 million people
during 2009-2050 according to the forecast of the Institute of Demography and Social
Studies of the National Academy of Sciences of Ukraine - that is +5.8% of the total population
of Ukraine at the beginning of 2051. Herewith, the share of the working age population
among immigrants will be equal 82% and the share of retirement age people under the
current retirement age (55/60 years of age) – 11%. In other words, the possible number of
people within the cohort of the “imported” labor force (taking into account the existing level
of the economic activity of the working age population) will be equal to around 1-1.2 million
people.
The accumulated migration gain of population of the EU countries (27 countries) will
reach 50 million people in 2050 or almost 10% of the total EU-27 population as at the
beginning of 2051. The share of migrants will reach 20% or more for the following European
countries: Spain, Italy, Portugal, Cyprus, Luxembourg, and Switzerland. 22
Remember that an increase in the retirement age to 65 ensures a growth in the labor
force of 1.2 million people, while the total number of pensioners decreases by 2.4 million
people. Therefore, increased retirement age has a much stronger effect on balancing public
incomes and expenditures, especially under conditions when labor force resources are
exhausted. There are also reasons to say that increased retirement age will not lead to a
destabilizing pressure on the labor market and will not lead to increased unemployment.
Firstly, a significant number of old age pensioners will continue working for a couple
of years after retirement in Ukraine. According to the data of the economic activity study,
employment levels of those older than retirement age are 25% and the unemployment level
is almost zero. Almost half of the employed retirement age population works in the
informal economy (mostly in private agricultural enterprises) and the rest (835,000 in 2008)
are in the formal economy23. According to statistics of enterprises, 75% of employed
pensioners are old age pensioners (including privileged (early retirement) pensioners) 24.
Current practice, whereby awarding an old age pension does not require even termination
from the job, contributes to developing the situation, where many employees maintain their
22
Konstantinos Giannakouris. Ageing characterises the demographic perspectives of the European societies / Eurostat, Statistics
in focus, 72/2008
23
Economic Activities of Ukrainian Population in 2008: Statistical Digest. – К.: State Committee of Statistics of Ukraine,
2009. – p. 62, 101.
24
Labor of Ukraine in 2008: Statistical Digest. – К.: State Committee of Statistics of Ukraine, 2009. – p. 75.
35
jobs and simultaneously obtain both pension and income from employment after reaching
retirement age. Continuing labor activity after reaching retirement age proves, undoubtedly,
the availability of significant reserves of working capacity potential. It is also a material factor
in the argument in favor of increasing retirement age. Therefore, there are a significant
number of jobs for people of 55/60-65 years of age today.
Secondly, clear segregation of the employed through “youth” and ”old age” types of
economic activities has occurred in the domestic labor force market (Figure 26). People aged
15-34 (the official definition of “young people” in the national legislation) amount to more
than half the employees in financial services activities and trade and more than one-third of
employees in hotels and restaurants and public administration. In other words, young
people “occupy” the most profitable types of activities (financial activities and public
administration) and commercial types of services where there are special income forms (e.g.
trade and hotels and restaurants in which non-standard forms of remuneration like tips, sales
commission, and etc. are common). The share of old age pensioners (including early
retirement pensioners) does not exceed 4-6% in these types of activities and 10.9% in hotels
and restaurants. The largest share of old age pensioners observed amongst the employed
are in real estate operations and business-services (particularly, in research and
development) where their share is around one-third, healthcare, education, and collective
and individual services (17-18%), i.e. mainly in budget institutions with low wage levels.
Taking this into account we can conclude that increased retirement age is unlikely to
complicate the employment opportunities for young people (including first job seekers)
since they are oriented into different criteria in evaluating jobs than older people.
Figure 26. Share of 15-34 Years Old Workers and Share of Old Age Pensioners Working as a
% to the Registered Number of Staff in Selected Industries, as of December 31, 200825
Third, the labor force supply will be increasing only when compared to the situation of
no changes in the retirement age and under the condition of a gradual increase in the
25
Labor of Ukraine in 2008: Statistical Digest. – К.: State Committee of Statistics of Ukraine, 2009. – p. 75.
36
retirement age. It will be decreasing during the whole forecast period, on a year to year
comparison within one option. In other words, increased retirement age leads to just a
slowing down in the rate of decrease of those in the economically active population.
Therefore, concerns about a worsening labor market situation due to increased
retirement age are absolutely ungrounded. In addition, such instruments as a flexible labor
market, part-time employment, distance employment (including home-based employment),
etc. may and should be used in order to solve the employment problems of old age people
and to take into account the interests of old age employees.
Influence of Increased Retirement Age Increasing on GDP
Under otherwise equal conditions, an increase in employment volume leads to an
increase in production volumes. In the most general case productivity is calculated as the
GDP per one employed person. Therefore, each percentage increase in the number of the
employed may be justifiably considered as a contribution towards creating additional GDP
when comparison to a situation where there are no changes.
Increasing retirement age for women to 60 years will ensure an increase in the number
of the employed population by 500,000 or 2.4%. Correspondingly, this will increase GDP by
2.4% than in case if there was no change in retirement age (Table 5).
Table 5. Assessing Increases in Employment Volumes and GDP According to Various Options
for Increasing Retirement Age (Compared to the Option of no Change)
Boundary of increase
2021
2025
2031
2050
Absolute gain in employment, million people:
to 60 years of age
0.5
0.4
0.5
0.4
to 62 years of age
0.5
0.7
0.7
0.7
to 65 years of age
0.5
0.7
1.1
1.2
Gain in employment and in the GDP, %:
to 60 years of age
2.4
2.3
2.5
2.5
to 62 years of age
2.4
4.0
4.1
4.8
to 65 years of age
2.4
4.0
6.1
7.8
Source: calculations of the author
Further increasing retirement age for women and men to 62 years of age would
increase employment volumes by 700,000 people in 2025 or by 4%. If the retirement age
increase is continued through to 65, the increase in employment in 2031 would be equal to
1.1 million people or 6.1%. This will ensure an additional 4.0% or 6.1% of GDP when
compared to the situation whereby retirement age is maintained at its present level.
Since inertial increases in economic activity and employment levels will last after the
date of reaching of the new retirement age limit, the contribution of the retirement age
increase into GDP will also increase till the end of the forecast period.
37
Influence of Increased Retirement Age on the Pension System’s
Financial Conditions
Increased retirement age ensures an increase in the number of contributors and,
correspondingly an increase in the Pension Fund’s revenues. Other things being equal, the
relative increase in the number of payers is enough to lead to an increase in size of
contributions. If the employed population’s participation level in the mandatory pension
insurance remains unchanged, the contribution to increasing the number of payers and the
volume of contribution inflows will be analogous to the contribution of the increase in
employment volumes to GDP (see Table 5).
Inflows into other social insurance funds (Unemployment Insurance Fund, Temporary
Disability Insurance Fund, and Industrial Injury Insurance Fund) should also increase by
approximately the same percent (differences in coverage of the contribution payers cohort
with particular insurance type will also have an influence).
At the same time, the decreasing number of old age pensioners will allow a decrease in
the Pension Fund’s expenditures on pension payments or an increase in the size of the
pensions. If the only step is increasing retirement age to 60 years for women, then number
of pension recipients will be 8.3% lower in 2021 than if there is no change in retirement age
(Table 6). If retirement age is increased to 62, the decrease will be equal to 12.8% in 2025,
and if it is increased to 65 there will be a 19.2% decrease in 2031.
Table 6. Assessment of the Decrease in Pension Recipients and the Decrease in Pension
Payment Expenditures on Under the Various Scenarios for Increasing Pension Age
(when Compared to the Case of No Change in the Retirement Age)
Boundary of increase
2021
2025
2031
2050
Decrease in the number of pension recipients, million people:
to 60 years of age
1.2
1.0
1.0
0.6
to 62 years of age
1.2
1.8
1.7
1.3
to 65 years of age
1.2
1.8
2.8
2.4
Decrease in the number of pension recipients, %:
to 60 years of age
8.3
7.2
6.9
4.1
to 62 years of age
8.3
12.8
12.2
8.7
to 65 years of age
8.3
12.8
19.3
16.3
Increase in current balance of the pension system, %:
to 60 years of age
10.7
9.5
9.4
6.6
to 62 years of age
10.7
16.8
16.3
13.5
to 65 years of age
10.7
16.8
25.4
24.1
Source: calculations of the author
Decreasing the number of pension recipients accompanied by an increase in the
number of contributors provides an opportunity to improve the Pension Fund’s balance
significantly. Under otherwise equal conditions, the current balance (difference between
38
contributions and expenditures on payment of pensions at the expense of the PFU’s own
funds) would increase by 10.7% in 2021, when age 60 retirement is reached, by 16.8% in
2025 when age 62 retirement is reached, and by 25.4% when age 65 retirement is reached.
This will provide the Pension Fund with the opportunity to prevent the appearance of a
deficit in its own funds for some time after the time when the retirement age increase ends
and when the load on the contributors will start to grow again.
Influence of Increased Retirement Age on the State Budget
Increasing retirement age and increased numbers in employment will ensure an
increase in the number of taxpayers and in inflows from personal income tax to the State
budget. The percentage of increase in inflows from the personal income tax will correspond
to the rate in employment growth (Table 5).
Increased retirement age significantly improves the Pension Fund’s financial capacity.
This is of significant importance for the optimizing the state budget’s expenditures, allowing
redirection of funds to areas of need such as social and economic development, particularly
reforming the healthcare and education systems, building up infrastructure, enhancing
employment opportunities by creating working places with appropriate working conditions
and decent wages.
Furthermore, decreasing the number of pensioners means a savings in budget
expense on different privileges for pensioners, particularly free travel on in public
transportation.
Maintaining pensionable service duration indicators is also important for financial
stability of the pension system and the state budget. The average duration of the
supplementary length of service (over 20/25 years) is equal to 15 years for today’s new
pensioners. This is not a lot considering that those people were employed for the majority of
their life during the Soviet era, when employment in public production was mandatory and
labor activity started much earlier. As was mentioned before, in the case of an unchanged
retirement age, those who will retire after 2020 will have significantly lower pensionable
service. One should also anticipate an increase in the number of people who will reach
retirement age and will not have the necessary pensionable service or will not gain the
right to a pension due to the widening of the informal employment sector and the low level
of the population’s participation in the pension insurance. This will demand additional
spending from the budget and insurance funds for ensuring the minimum pension
guarantees, the payment of social pensions, the provision of assistance to people with low
incomes, etc.
39
CONCLUSIONS
Ensuring a decent level of pensions is one of the tasks of the pension reform; however, fulfilling
this goal is impossible without maintaining a rational ratio between the number of contributors and
the number of pensioners. An aging population is a long-term trend in Ukraine’s demographic
development and is reflected by increases in the proportion of elderly people and in the demographic
load on the working age population.
Increases in the number of pensioners and a decrease in the number of contributors will bring
additional pressure to bear on the Pension Fund budget and on the State Budget of Ukraine. Under
such conditions Ukrainian society will face a choice in the ways of supporting the pension system’s
financial capacity:
а) increase the pension contribution size for employees and/or employers;
b) raise subsidies from the budget or establish additional taxes;
c) decrease the pension size when compared to incomes of the working population;
d) increase retirement age.
Increasing the contribution rate for all contribution payers is impossible, since it is currently
already very high (even compared with other countries of the world). Increased contributions may be
possible for certain categories which pay pension contributions under privileged conditions
(partially). Increasing subsidies from the budget is impossible, since they will then preclude other
programs of economic and social development (healthcare, education, infrastructure, security, etc.).
The existing ratio of pensions to wages will have to decrease from 40% in 2009 to 28% in 2050, if the
size of contributions or subsidies is not to be increased.
Results of the study show that increasing the retirement age allows for a reduction in the
demographic pressure on the pension system for a long period of time. The effect of the reduction is
notable immediately once it is implemented and that is why its implementation it is especially
important during a crisis. Simplicity of implementation and a minimum of organizational support form
a distinctive feature of the increased retirement option when compared to other measures.
The “crisis reduction” scenario for increasing the retirement age (simultaneous increase in the
retirement age for women and men to 65 years of age starting from 2011 by six months per annum) is
the most efficient among all the scenarios. The load on the contributors will decrease in 2011-2020 to
77% by 2020 (against a current 88%). It will grow to 80% in 2020-2030 but the system will return to its
current value only in 2043. In the case of a two-step process to increase retirement age to 65 years of
age, the effect is much lower in 2011-2030 but during the next period the effects of both scenarios
become even (Figure 25).
Increasing retirement age solely for women by 5 years will allow maintenance of the load of
pensioners on contribution payers at the existing level (87%) only till 2021. The average duration of
the pensionable service of women should increase to at least 36 years in 2021 (as of now it is equal to
33 years) and life expectancy in retirement should decrease from the forecasted 25 years to 21. These
two factors will increase the size of women’s pensions under the second pillar
Therefore, increasing retirement age for both genders to 65 years of age, as has been done by
many other countries around the world, is the most rational option for maintaining the system’s
stability and preventing its bankruptcy.
40
Annexes
Annex 1. Total Fertility Rate in Europe Countries, Children per Women
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
EU - 27
-
-
-
-
-
-
1,45
1,47
1,49
1,50
1,53
-
-
Belgium
1,59
1,60
1,60
1,62
-
-
-
1,66
1,72
1,72
-
-
-
Bulgaria
1,23
1,09
1,11
1,23
1,26
1,21
1,21
1,23
1,29
1,32
1,38
1,42
1,48
Czech Republic
1,18
1,17
1,16
1,13
1,14
1,14
1,17
1,18
1,23
1,28
1,33
1,44
1,50
Denmark
1,75
1,76
1,73
1,74
1,78
1,76
1,72
1,76
1,78
1,80
1,85
1,84
1,89
Germany
-
-
-
-
1,38
1,35
1,34
1,34
1,36
1,34
1,33
1,37
1,38
1,37
1,32
1,28
1,32
1,38
1,34
1,37
1,37
1,47
1,50
1,55
1,63
1,65
Estonia
Ireland
1,88
1,93
1,94
1,90
1,89
1,94
1,97
1,96
1,94
1,86
1,89
2,01
2,10
Greece
1,28
1,28
1,26
1,24
1,26
1,25
1,27
1,28
1,30
1,33
1,40
1,41
1,51
Spain
1,16
1,18
1,16
1,19
1,23
1,24
1,26
1,31
1,33
1,35
1,38
1,40
1,46
France
-
-
1,78
1,81
1,89
1,89
1,88
1,89
1,92
1,94
2,00
1,98
2,00
Italy
1,20
1,21
1,21
1,23
1,26
1,25
1,27
1,29
1,33
1,32
1,35
1,37
-
Cyprus
1,95
1,86
1,76
1,67
1,64
1,57
1,49
1,50
1,49
1,42
1,45
1,39
1,46
Latvia
-
-
-
-
-
-
1,23
1,29
1,24
1,31
1,35
1,41
1,44
Lithuania
1,49
1,47
1,46
1,46
1,39
1,30
1,24
1,26
1,26
1,27
1,31
1,35
1,47
Luxembourg
1,77
1,71
1,68
1,74
1,76
1,66
1,63
1,62
1,66
1,63
1,65
1,61
1,61
Hungary
1,46
1,37
1,32
1,28
1,32
1,31
1,30
1,27
1,28
1,31
1,34
1,32
1,35
Malta
2,03
1,98
1,88
1,77
1,70
1,48
1,45
1,48
1,40
1,38
1,39
1,37
1,44
Netherlands
1,53
1,56
1,63
1,65
1,72
1,71
1,73
1,75
1,72
1,71
1,72
1,72
1,77
Austria
1,45
1,39
1,37
1,34
1,36
1,33
1,39
1,38
1,42
1,40
1,40
1,38
1,41
Poland
1,59
1,51
1,44
1,37
1,35
1,31
1,25
1,22
1,23
1,24
1,27
1,31
1,39
Portugal
1,44
1,47
1,48
1,50
1,55
1,45
1,47
1,44
1,40
1,40
1,36
1,33
1,37
Romania
1,30
1,32
1,32
1,30
1,31
1,27
1,25
1,27
1,29
1,32
1,32
1,30
1,35
Slovenia
1,28
1,25
1,23
1,21
1,26
1,21
1,21
1,20
1,25
1,26
1,31
1,38
1,53
Slovakia
1,47
1,43
1,37
1,33
1,30
1,20
1,19
1,20
1,24
1,25
1,24
1,25
1,32
Finland
1,76
1,75
1,70
1,73
1,73
1,73
1,72
1,77
1,80
1,80
1,84
1,83
1,85
Sweden
1,60
1,52
1,50
1,50
1,54
1,57
1,65
1,71
1,75
1,77
1,85
1,88
1,91
United Kingdom
1,73
1,72
1,71
1,68
1,64
1,63
1,64
1,71
1,76
1,78
1,84
-
-
Iceland
2,12
2,04
2,05
1,99
2,08
1,95
1,93
1,99
2,04
2,05
2,08
2,09
2,15
Norway
1,89
1,86
1,81
1,85
1,85
1,78
1,75
1,80
1,83
1,84
1,90
1,90
1,96
Switzerland
1,50
1,48
1,47
1,48
1,50
1,38
1,39
1,39
1,42
1,42
1,44
1,46
1,48
Ukraine
1,33
1,27
1,21
1,12
1,11
1,09
1,13
1,17
1,22
1,21
1,31
1,35
1,46
Source: State Committee of Statistics of Ukraine, Eourostat
In 2008 total fertility rate in Ukraine was 1,46 children per women.
41
Annex 2. Demographic Forecast for Ukraine up to 2050
UN forecast
20052010
20102015
20152020
20202025
20252030
20302035
20352040
20402045
20452050
1,31
1,47
1,57
1,62
1,67
1,72
1,77
1,82
1,85
men
62,8
63,9
65,4
66,7
67,8
68,8
69,6
70,4
71,3
women
73,8
74,3
75
75,7
76,4
76,9
77,5
78,1
78,8
Total fertility, children per
woman
Average life expectancy at
birth, years:
Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population
Prospects: The 2008 Revision, http://esa.un.org/unpp
Forecast of the Institute of Demography and Social Studies of the National Academy of Science
of Ukraine
2008
2010
2020
2030
2040
2050
1,45
1,47
1,54
1,57
1,59
1,60
men
62,3
62,3
65,5
68,3
69,9
71,0
women
73,9
73,9
75,6
77,0
77,7
78,2
0,03%
0,05%
0,11%
0,15%
0,15%
0,14%
Total fertility, children per
woman
Average life expectancy at
birth, years:
Net Migration Rate, %
Source: Complex Demographic Forecast for Ukraine for the Period by 2050, Adjusted in Accordance with the 2009 Data / Institute of
Demography and Social Studies of NAS of Ukraine http://www.idss.org.ua/public.html
42
Annex 3. Life Expectancy at Birth in Europe Countries
Men
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
EU - 27
-
-
-
-
-
-
74,5
74,6
75,2
75,4
75,8
-
Austria
73,7
74,1
74,5
74,9
75,2
75,7
75,8
75,9
76,4
76,7
77,2
77,5
Belgium
73,9
74,2
74,4
74,4
74,6
75,0
75,1
75,3
76,0
76,2
76,6
77,1
Bulgaria
67,4
67,0
67,4
68,3
68,4
68,6
68,8
68,9
69,0
69,0
69,2
69,5
United Kingdom
74,3
74,7
74,8
75,0
75,5
75,8
76,0
76,2
76,8
77,1
77,3
-
Greece
75,1
75,4
75,4
75,5
75,5
76,0
76,2
76,5
76,6
76,8
77,2
77,1
Denmark
73,1
73,6
74,0
74,2
74,5
74,7
74,8
75,0
75,4
76,0
76,1
76,2
Estonia
64,2
64,2
63,9
64,7
65,2
64,8
65,2
66,1
66,4
67,3
67,4
67,2
Ireland
73,1
73,4
73,4
73,4
74,0
74,5
75,2
75,9
76,5
77,3
77,4
77,4
Iceland
76,5
76,3
77,7
77,4
77,8
78,3
78,6
79,5
78,9
79,6
79,5
79,6
Spain
74,5
75,2
75,3
75,3
75,8
76,2
76,3
76,3
76,9
77,0
77,7
77,8
Italy
75,4
75,8
76,0
76,5
76,9
77,1
77,4
77,1
77,9
78,0
78,5
-
Cyprus
75,3
74,9
74,7
76,0
75,4
76,6
76,4
76,9
76,6
76,8
78,4
77,8
Latvia
-
-
-
-
-
-
64,7
65,6
65,9
65,4
65,4
65,8
Lithuania
64,6
65,5
66,0
66,3
66,8
65,9
66,2
66,4
66,3
65,3
65,3
64,9
Luxembourg
73,3
74,0
73,7
74,4
74,6
75,1
74,7
74,8
76,0
76,7
76,8
76,7
Malta
74,8
75,2
74,9
75,3
76,2
76,6
76,3
76,4
77,4
77,3
77,0
77,5
Netherlands
74,7
75,2
75,2
75,4
75,6
75,8
76,0
76,3
76,9
77,3
77,7
78,1
Germany
73,6
74,1
74,6
74,8
75,1
75,6
75,7
75,8
76,5
76,7
77,2
77,4
Norway
75,4
75,5
75,6
75,6
76,0
76,2
76,4
77,1
77,6
77,8
78,2
78,3
Poland
68,1
68,5
68,9
68,8
69,6
70,0
70,3
70,5
70,6
70,8
70,9
71,0
Portugal
71,6
72,2
72,4
72,6
73,2
73,5
73,8
74,2
75,0
74,9
75,5
75,9
Romania
65,1
65,2
66,3
67,1
67,7
67,5
67,4
67,7
68,3
68,7
69,2
69,7
Slovakia
68,9
68,9
68,6
69,0
69,2
69,5
69,8
69,8
70,3
70,2
70,4
70,6
Slovenia
71,1
71,1
71,3
71,8
72,2
72,3
72,6
72,5
73,5
73,9
74,5
74,7
Hungary
66,3
66,7
66,5
66,7
67,6
68,2
68,3
68,4
68,7
68,7
69,2
69,4
Finland
73,1
73,5
73,6
73,8
74,2
74,6
74,9
75,2
75,4
75,6
75,9
76,0
France
-
-
74,8
75,0
75,3
75,5
75,7
75,8
76,7
76,8
77,3
-
Czech Republic
70,4
70,5
71,2
71,5
71,7
72,1
72,1
72,0
72,6
72,9
73,5
73,8
Switzerland
76,0
76,3
76,4
76,9
77,0
77,5
77,9
78,0
78,6
78,7
79,2
79,5
Sweden
Ukraine
76,6
76,8
76,9
77,1
77,4
77,6
77,8
78,0
78,4
78,5
78,8
79,0
61,9
62,7
63,0
62,4
62,8
62,7
62,6
62,6
62,2
62,4
62,5
62,5
Source: State Committee of Statistics of Ukraine, Eourostat
43
Continuing of Annex 3
Women
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
EU - 27
-
-
-
-
-
-
80,9
80,8
81,5
81,5
82,0
-
Austria
80,2
80,7
81,0
81,0
81,2
81,7
81,7
81,5
82,1
82,3
82,8
83,1
Belgium
80,7
80,7
80,7
81,0
81,0
81,2
81,2
81,1
81,8
81,9
82,3
82,6
Bulgaria
74,5
73,8
74,6
75,0
75,0
75,4
75,5
75,9
76,2
76,2
76,3
76,7
United Kingdom
79,5
79,7
79,8
79,9
80,3
80,5
80,6
80,5
81,0
81,2
81,7
-
Greece
80,2
80,4
80,3
80,5
80,6
81,0
81,1
81,2
81,3
81,6
81,9
81,8
Denmark
78,4
78,6
79,0
79,0
79,2
79,3
79,4
79,8
80,2
80,5
80,7
80,6
Estonia
75,6
75,9
75,4
76,0
76,2
76,4
77,0
77,1
77,8
78,1
78,6
78,8
Ireland
78,7
78,7
79,1
78,9
79,2
79,9
80,5
80,8
81,4
81,8
82,2
82,1
Iceland
81,2
81,6
81,6
81,4
81,6
83,2
82,5
82,5
83,2
83,5
82,9
83,4
Spain
82,0
82,3
82,4
82,4
82,9
83,2
83,2
83,0
83,7
83,7
84,4
84,3
Italy
81,8
82,0
82,1
82,6
82,8
83,1
83,2
82,8
83,8
83,6
84,2
-
Cyprus
80,0
80,0
79,8
79,9
80,1
81,4
81,0
81,3
81,9
80,9
82,2
82,2
Latvia
-
-
-
-
-
-
76,0
75,9
76,2
76,5
76,3
76,5
Lithuania
75,9
76,6
76,7
77,0
77,5
77,6
77,5
77,8
77,7
77,3
77,0
77,2
Luxembourg
80,2
80,0
80,8
81,4
81,3
80,7
81,5
80,9
82,4
82,3
81,9
82,2
Malta
79,6
80,1
80,0
79,4
80,3
81,2
81,3
80,8
81,2
81,4
81,9
82,2
Netherlands
80,5
80,7
80,8
80,5
80,7
80,8
80,7
81,0
81,5
81,7
82,0
82,5
Germany
80,1
80,5
80,8
81,0
81,2
81,5
81,3
81,3
81,9
82,0
82,4
82,7
Norway
81,2
81,1
81,4
81,2
81,5
81,7
81,6
82,1
82,6
82,7
82,9
82,9
Poland
76,6
77,0
77,4
77,5
78,0
78,4
78,8
78,8
79,2
79,3
79,7
79,8
Portugal
79,0
79,3
79,6
79,7
80,2
80,5
80,6
80,6
81,5
81,3
82,3
82,2
Romania
72,8
73,3
73,8
74,2
74,8
74,9
74,7
75,0
75,5
75,7
76,2
76,9
Slovakia
77,0
76,9
77,0
77,4
77,5
77,7
77,7
77,7
78,0
78,1
78,4
78,4
Slovenia
79,0
79,1
79,2
79,5
79,9
80,4
80,5
80,3
80,8
80,9
82,0
82,0
Hungary
75,0
75,5
75,6
75,6
76,2
76,7
76,7
76,7
77,2
77,2
77,8
77,8
Finland
80,7
80,7
81,0
81,2
81,2
81,7
81,6
81,9
82,5
82,5
83,1
83,1
France
-
-
82,6
82,7
83,0
83,0
83,0
82,7
83,8
83,7
84,4
-
Czech Republic
77,5
77,6
78,2
78,3
78,5
78,6
78,7
78,6
79,2
79,3
79,9
80,2
Switzerland
82,2
82,2
82,7
82,7
82,8
83,2
83,2
83,2
83,8
84,0
84,2
84,4
Sweden
Ukraine
81,7
82,0
82,1
82,0
82,0
82,2
82,2
82,5
82,8
82,9
83,1
83,1
73,0
73,5
73,7
73,6
74,1
74,1
74,1
74,1
74,0
74,1
74,2
74,3
Source: State Committee of Statistics of Ukraine
44
Annex 4. Ratio of Population 65 and Over to the Amount of Population 15-64 Years Old
in European Countries, %
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
EU - 27
22,5
22,8
23,0
23,2
23,5
23,8
24,1
24,3
24,6
24,9
25,2
25,2
Austria
22,8
22,9
22,9
22,9
22,8
22,9
22,7
22,8
23,5
24,4
25,0
25,4
Belgium
24,7
25,0
25,3
25,5
25,7
25,8
26,0
26,1
26,3
26,2
25,9
25,8
Bulgaria
22,7
23,1
23,4
23,8
24,0
24,9
24,9
24,9
24,8
24,9
24,9
25,0
United Kingdom
24,5
24,5
24,4
24,3
24,3
24,3
24,3
24,3
24,3
24,2
24,1
24,3
Greece
23,0
23,4
23,8
24,2
24,7
25,3
25,8
26,4
26,8
27,6
27,6
27,8
Denmark
22,4
22,3
22,2
22,2
22,2
22,3
22,3
22,5
22,7
22,9
23,2
23,6
Estonia
21,5
22,0
22,2
22,4
22,7
23,0
23,5
23,9
24,3
24,5
25,1
25,3
Ireland
17,4
17,2
17,0
16,8
16,6
16,5
16,4
16,4
16,4
16,3
15,8
15,9
Iceland
17,8
17,9
17,8
17,8
17,8
17,8
17,9
17,9
17,9
17,6
17,2
17,1
Spain
23,2
23,7
24,1
24,5
24,7
24,8
24,7
24,6
24,4
24,3
24,2
24,1
Italy
25,2
25,8
26,3
26,8
27,4
27,9
28,5
28,9
29,3
29,8
30,2
30,4
Cyprus
17,1
17,1
17,0
17,0
17,0
17,4
17,6
17,5
17,3
17,3
17,6
17,8
Latvia
21,4
21,8
22,0
22,1
22,6
22,9
23,3
23,6
24,1
24,4
24,8
24,9
Lithuania
19,5
20,0
20,5
20,8
21,3
21,7
22,0
22,3
22,3
22,5
22,7
23,0
Luxembourg
21,2
21,3
21,4
21,4
20,7
20,8
20,9
20,8
20,9
20,8
20,7
20,6
Malta
17,4
17,6
17,8
17,9
18,1
18,5
18,7
19,0
19,3
19,8
19,8
19,3
Netherlands
19,6
19,8
19,9
20,0
20,1
20,2
20,3
20,5
20,8
21,1
21,5
21,8
Germany
23,0
23,2
23,3
23,9
24,5
25,2
25,9
26,8
27,8
28,9
29,9
30,0
Norway
24,5
24,2
23,9
23,5
23,2
23,0
22,7
22,5
22,4
22,4
22,2
22,1
Poland
17,2
17,4
17,5
17,6
18,0
18,2
18,4
18,6
18,7
18,9
19,0
18,9
Portugal
22,6
23,0
23,4
23,7
24,2
24,5
24,7
24,9
25,2
25,4
25,6
23,4
Romania
18,6
19,1
19,4
19,7
19,6
20,4
20,6
20,9
21,1
21,2
21,3
21,3
Slovakia
16,5
16,6
16,6
16,6
16,5
16,3
16,3
16,3
16,3
16,4
16,5
16,6
Slovenia
18,5
19,0
19,4
19,8
20,2
20,6
21,0
21,4
21,8
22,2
22,7
23,3
Hungary
21,3
21,6
21,8
22,0
22,2
22,3
22,4
22,6
22,7
22,9
23,2
23,5
Finland
21,7
21,9
22,0
22,2
22,4
22,7
22,9
23,3
23,8
24,0
24,8
24,8
France
23,5
23,8
24,0
24,3
24,4
24,6
24,7
24,7
24,9
24,9
24,9
25,1
Czech Republic
19,6
19,7
19,8
19,8
19,8
19,7
19,7
19,7
19,8
20,0
20,2
20,5
Switzerland
22,1
22,3
22,5
22,7
22,9
23,1
23,1
23,2
23,3
23,5
23,8
24,1
Sweden
Ukraine
27,4
27,3
27,1
26,9
26,8
26,6
26,5
26,4
26,5
26,4
26,4
26,7
21,1
21,1
20,6
20,3
20,5
20,9
21,8
22,4
23,0
23,3
23,6
23,3
Source: State Committee of Statistics of Ukraine, Eourostat
45
Annex 5. Pension Expenditures Financed from the State Budget of Ukraine, 2009
Category of benefits
Number of
Average size of a
beneficiaries at the
pension, UAH
beginning of the
year
Pensions being supplemented by additional payments from the State Budget (part of the payment at the
expense of the Pension Fund)
Pensions granted in accordance with special laws to workers of particular professions, positions:
"On State Service"
96,580
2,719.23
"On General Prosecutor’s Office"
5,222
5,677.73
"On Status of People’s Deputy of Ukraine"
893
15,443.23
"On Status of Judges"
1,016
5,636.91
"On Judicial Examination"
230
2,150.87
Customs Code
236
4,431.78
Regulation on Assistant-Consultant of a People’s Deputy
770
3,374.16
"On Scientific and Scientific Technical Activities"
"On State Support of Mass Media and Social Protection of
Journalists"
79,862
3,801
"On Service in Bodies of Local Self-Government"
12,796
"On the National Bank of Ukraine"
765
"On Diplomatic Service"
1
"On the Cabinet of Ministers of Ukraine"
103
614,620
"On Pension Provision of Military Men, Persons of Senior Staff
and the Ranks of Bodies of Domestic Affairs and Some Other
Persons"
Individuals out of the general number of pensioners which simultaneously covered by other legal acts:
"On Status and Social Protection of Population Suffered from
816,063
Chornobyl Catastrophe"
1,902.99
2,800.24
2,495.05
4,284.58
3,000.00
10,404.85
1,702.91
972.78
"On Status of War Veterans, Guarantees of Their Social
Protection"
"On Basic Principles of Social Protection of Labor Veterans and
Other Elderly Citizens in Ukraine"
2,342,965
920.52
8,820
1,687.63
"On Rehabilitation of Victims of Political Repressions in Ukraine"
"On Victims of Nazi Persecution"
"On Donation of Blood and Its Components"
"On Status of Mountain Settlements"
"On Pensions for Special Merits to Ukraine"
"On Refugees"
"On Raising the Prestige of Miners’ Work"
"On Social Protection of War-Affected Children"
Pensions fully paid at the expense of funds of the State Budget
" On Status and Social Protection of Population Suffered from
Chornobyl Catastrophe "
83,710
40,932
59,240
221,411
848,418
86
127,763
4,964,401
921.71
856.61
1,083.56
816.92
1,191.20
780.23
2,132.27
950.49
75,903
1,402.64
84,120
1,061.74
46,199
1,523.02
189,157
537.98
" On Pension Provision of Military Men, Persons of Senior Staff
and the Ranks of Bodies of Domestic Affairs and Some Other
Persons "
"On State Social Aid to the Persons not Eligible for Pension and
Disabled" (maintenance aid)
"On Pension Provision" (social pensions)
Source: State Committee of Statistics, Pension Fund of Ukraine
46
Continuing of Annex 5
Other lines financed at the expense of the State Budget
Budget line of the State Pension Fund
Pension provision to workers directly employed full time on underground works
(early pensions)
Insurance contribution for compulsory state pension insurance of specific
categories of individuals
Compensation of losses from application of special payment rate of contribution
on compulsory pension insurance by payers of the fixed agricultural tax
Coverage of the Pension Fund deficit
Planned expenditures, UAH
thousands
4,075,818.5
1,748,467.7
626,223.5
13,053,039.7
Source: budget of the State Pension Fund for 2009, approved by the Decree of the Cabinet of Ministers of March 11, 2009.
47
Annex 6. Pension Expenditures as a Percentage of Ukraine’s GDP
EU - 27
EU - 15
Austria
Belgium
Bulgaria
United Kingdom
Greece
Denmark
Estonia
Ireland
Iceland
Spain
Italy
Cyprus
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Germany
Norway
Poland
Portugal
Romania
Slovakia
Slovenia
Hungary
Finland
France
Czech Republic
Switzerland
Sweden
Ukraine
2000
12,4
14,3
10,9
11,9
11,1
10,5
6,6
3,6
6,2
9,6
14,4
5,8
9,5
7,8
9,4
8,0
12,5
13,0
7,6
12,6
10,5
6,1
7,5
11,1
8,5
10,6
12,9
8,5
12,1
11,3
8,1
2004
12,3
14,5
11,1
10,6
11,7
11,0
6,0
5,0
7,1
9,1
14,6
6,6
6,8
6,7
9,9
9,1
12,8
13,4
8,4
13,3
12,3
6,2
7,4
10,5
9,3
11,2
13,1
8,3
13,0
12,3
11,4
2005
12,2
12,3
14,3
11,1
8,0
10,8
12,1
11,0
5,9
5,0
7,0
9,1
14,7
6,8
6,3
6,5
9,6
9,2
12,5
13,3
8,0
12,7
12,7
6,2
7,5
10,3
9,8
11,2
13,2
8,4
13,1
12,4
14,5
2006
12,0
12,1
14,1
11,0
7,6
10,8
12,0
10,7
6,0
5,0
6,8
9,0
14,6
6,8
6,1
6,3
8,6
9,1
12,3
12,9
7,6
12,5
13,0
6,0
7,3
10,3
10,0
11,0
13,2
8,3
12,6
12,0
13,6
2007
11,8
12,0
13,8
10,7
7,3
10,5
12,1
10,8
5,9
5,2
7,0
9,0
14,6
6,8
5,3
6,6
8,2
9,1
12,1
12,4
7,8
11,6
13,1
6,4
7,3
9,7
10,4
10,8
13,3
8,2
12,4
11,8
13,9*
Source: State Committee of Statistics of Ukraine, Eourostat
*From 2007 including expenditure on pensions of military and other force structures; they accounted to 1% GDP. In 2008 pension
expenditures in Ukraine accounted for 15.8% GDP, in 2009 – 18.2%.
48
Annex 7. Retirement Age Set by Effective Legislation of Countries of the World as of
2005-2006
Retirement age, years
of age
For females
For males
50
Kiribati, Nigeria, Sri Lanka
Kiribati, Nigeria
55
Algeria, Australia, Bahrain, Benin, Chad,
Columbia, Congo, Cuba, Cote d’Ivoire, Fiji, Haiti,
India, Indonesia, Iran, Jordan, Kenya,
Madagascar, Malaysia, Mauritania, Nepal,
Pakistan, Papua New Guinea, Rwanda, Saudi
Arabia, Senegal, Singapore, Syria, Taiwan,
Thailand, Uganda, Uzbekistan, Venezuela,
Vietnam, Byelorussia, Russian Federation,
Ukraine
Sri Lanka, Australia, Benin, Chad, Congo, Cote
d’Ivoire, Fiji, Haiti, India, Indonesia, Kenya, Malaysia,
Nepal, Papua New Guinea, Rwanda, Senegal,
Singapore, Thailand, Uganda
from 55 to 56
Slovakia (55,2)
-
56
Burkina Faso
Burkina Faso
57
Azerbaijan, Turkmenistan, Italy, Moldova,
Panama
Italy
from 57 to 58
Kirgizstan (57,66), Romania (57,75)
-
58
Kazakhstan, Mali, Turkey, Serbia and
Montenegro
Mali
from 58 to 59
Bulgaria (58,5)
-
59
Croatia
-
from 59 to 60
Estonia (59,5), Czech Republic (59,66)
-
60
Argentina, Brazil, Burundi, Cameroon, Cape
Verde, Chile, China, Congo, Dominica, Egypt,
Ethiopia, Georgia, Ghana, Grenada, Guyana,
Jamaica, Southern Korea, Lebanon, Lao PDR,
Libyan Arab Jamahiriya, Mauritius, Morocco,
Paraguay, The Philippines, Saint Vincent and
the Grenadines, Sierra Leone, RSA, Sudan,
Tanzania, Trinidad and Tobago, Tunisia,
Uruguay, Zimbabwe, Albania, Austria, Canada,
Costa Rica, France, Greece, Guatemala,
Honduras, Hungary, Lithuania, Nicaragua,
Poland, Great Britain
Algeria, Bahrain, Columbia, Cuba, Iran, Jordan,
Madagascar, Mauritania, Pakistan, Saudi Arabia,
Syria, Taiwan, China, Uzbekistan, Venezuela,
Vietnam, Byelorussia, Russian Federation, Ukraine,
Turkey, Burundi, Cameroon, China, Dominica, Egypt,
Ethiopia, Ghana, Grenada, Guyana, Southern Korea,
Lao PDR, Lebanon, Mauritius, Morocco, Paraguay,
The Philippines, Saint Vincent and the Grenadines,
Sierra Leone, Sudan, Tanzania, Trinidad and Tobago,
Tunisia, Uruguay, Zimbabwe, Canada, France,
Guatemala, Nicaragua
from 60 to 61
Armenia (60,5), Latvia (60,5)
-
61
Sweden
Sweden
from 61 to 62
-
Czech Republic (61,5)
62
Bangladesh, Saint Kitts and Nevis, Saint Lucia
Slovakia, Azerbaijan, Turkmenistan, Moldova,
Panama, Kirgizstan, Costa Rica, Hungary, Latvia,
Bangladesh, Saint Kitts and Nevis, Saint Lucia
from 62 to 63
Slovenia (62,33)
Lithuania (62,5)
63
Finland
Romania, Kazakhstan, Serbia and Montenegro,
Bulgaria, Estonia, Armenia, Finland
64
Belgium, Switzerland
Croatia
65
Bolivia, Cyprus, Ecuador, Hong Kong, Japan,
New Zealand, Peru, Germany, Ireland,
Luxembourg, Mexico, The Netherlands,
Portugal, Spain, the USA
Argentina, Brazil, Cape Verde, Chile, Congo,
Georgia, Jamaica, Libyan Arab Jamahiriya, RSA,
Albania, Austria, Greece, Honduras, Poland, Great
Britain, Slovenia, Belgium, Switzerland, Bolivia,
Cyprus, Ecuador, Hong Kong, Japan, New Zealand,
Peru, Germany, Ireland, Luxembourg, Mexico, The
Netherlands, Portugal, Spain, the USA
from 65 to 66
Barbados (65,5)
Barbados (65,5)
66
Israel
-
67
Denmark, Iceland, Norway
Denmark, Iceland, Norway
70
-
Israel
Worked out by L. Tkachenko basing on the materials of the Social Security Programs throughout the World (SSPTW)
http://www.ilo.org/dyn/sesame/ifpses.socialdatabase
49
Annex 8. Difference Between the Retirement Age of Females and Males through
Countries of the World (data for 2005-2006)
Difference, years
Countries
Equal retirement
age
Kiribati, Nigeria, Australia, Benin, Chad, Congo, Cote d’Ivoire, Fiji, Haiti, India, Indonesia, Kenya, Malaysia,
Nepal, Papua New Guinea, Rwanda, Senegal, Singapore, Thailand, Uganda, Burkina Faso, Italy, Mali,
Burundi, Cameroon, China, Dominica, Egypt, Ethiopia, Ghana, Grenada, Guyana, Southern Korea, Lao
PDR, Lebanon, Mauritius, Morocco, Paraguay, The Philippines, Saint Vincent and the Grenadines, Sierra
Leone, Sudan, Tanzania, Trinidad and Tobago, Tunisia, Uruguay, Zimbabwe, Canada, France, Guatemala,
Nicaragua, Sweden, Bangladesh, Saint Kitts and Nevis, Saint Lucia, Finland, Bolivia, Cyprus, Equator,
Hong Kong, Japan, New Zealand, Peru, Germany, Ireland, Luxembourg, Mexico, The Netherlands,
Portugal, Spain, THE USA, Barbados, Denmark, Iceland, Norway – total of 76 countries
1
from 1 to 2
2
Belgium, Switzerland
Latvia (1,5), Czech Republic (1,84)
Turkey, Costa Rica, Hungary
from 2 to 3
Lithuania (2,5), Armenia (2,5), Slovenia (2,67)
from 3 to 4
Estonia (3,5)
4
from 4 to 5
5
over 5
Israel
Kirgizstan (4,34), Bulgaria (4,5)
Sri Lanka, Algeria, Bahrain, Columbia, Cuba, Iran, Jordan, Madagascar, Mauritania, Pakistan, Saudi Arabia,
Syria, Taiwan, Uzbekistan, Venezuela, Vietnam, Byelorussia, Russian Federation, Ukraine, Azerbaijan,
Turkmenistan, Moldova, Panama, Kazakhstan, Serbia and Montenegro, Croatia, Argentina, Brazil, Cape
Verde, Chile, Congo, Georgia, Jamaica, Libyan Arab Jamahiriya, RSA, Albania, Austria, Greece, Honduras,
Poland, Great Britain – total of 41 countries
Romania (5,25), Slovakia (6,75)
Worked out by L. Tkachenko basing on the materials of the Social Security Programs throughout the World (SSPTW)
http://www.ilo.org/dyn/sesame/ifpses.socialdatabase
Annex 9. Life Expectancy at Birth for Women in the Countries Where Retirement Age
Does Not Exceed 55 Years (data of 2005-2006)
Retirement age 50 years
Nigeria
Kiribati
Sri Lanka
Retirement age 55 years
Ruanda
Cote d'Ivoire
Uganda
Chad
Kenya
Congo
Benin
Papua New Guinea
Madagascar
Haiti
Nepal
Senegal
Pakistan
Mauritania
India
Life expectancy at birth,
years
47,2
69,4
75,8
47,3
48,6
51,0
51,8
53,7
55,7
57,0
60,2
60,6
61,9
63,4
64,7
65,2
65,4
65,7
Retirement age 50 years
Uzbekistan
Fiji
Indonesia
Iran
Russian Federation
Algeria
Ukraine
Jordan
Thailand
Saudi Arabia
Belarus
Syria
Vietnam
Colombia
Malaysia
Venezuela
Bahrain
Cuba
Singapore
Australia
Life expectancy at birth,
years
70,1
70,8
72,0
72,1
72,3
73,3
73,7
74,1
74,7
74,9
75,0
75,8
75,9
76,3
76,3
76,5
77,2
80,0
81,6
83,4
Worked out by L. Tkachenko basing on the materials of the Social Security Programs Throughout the World (SSPTW)
http://www.ilo.org/dyn/sesame/ifpses.socialdatabase and Human Development Index 2008 / UNDP. http://hdrstats.undp.org
50
Annex 10. Life Expectancy at Birth and in the Age of 65 in Ukraine and EU Countries,
2006-2007
EU - 27
Life expectancy
at birth
at 65 years
women
men
women
men
82,0
75,8
20,4
16,8
21,0
17,6
In comparison to Ukraine
at birth
at 65 years
women
men
women
men
7,8
13,3
4,4
4,9
Austria
83,1
77,5
8,9
15,0
5,0
5,6
Belgium
82,6
77,1
21,0
Bulgaria
76,7
69,5
16,4
17,3
8,4
14,6
5,0
5,4
13,3
2,4
7,0
0,4
1,3
United Kingdom
81,7
77,3
20,1
Greece
81,8
77,1
19,4
17,4
7,5
14,8
4,2
5,5
17,4
7,6
14,6
3,4
5,5
Denmark
80,6
76,2
19,2
Estonia
78,8
67,2
18,5
16,5
6,4
13,7
3,2
4,6
13,1
4,6
4,7
2,5
1,2
Ireland
82,1
77,4
20,1
Iceland
83,4
79,6
21,0
17,1
7,8
14,9
4,1
5,1
18,4
9,2
17,1
5,0
6,5
Spain
84,3
77,8
Italy
84,2
78,5
22,0
17,8
10,1
15,3
6,0
5,9
21,8
17,9
10,0
16,0
5,8
6,0
Cyprus
82,2
77,8
19,6
Latvia
76,5
65,8
17,2
17,4
8,0
15,3
3,6
5,4
12,8
2,2
3,3
1,2
0,9
Lithuania
77,2
64,9
17,9
12,9
3,0
2,3
1,9
0,9
Luxembourg
82,2
76,7
20,3
16,4
8,0
14,2
4,3
4,4
Malta
82,2
77,5
20,3
16,7
8,0
15,0
4,3
4,8
Netherlands
82,5
78,1
20,7
17,1
8,3
15,6
4,7
5,2
Germany
82,7
77,4
20,7
17,4
8,5
14,9
4,7
5,5
Norway
82,9
78,3
20,8
17,5
8,7
15,8
4,9
5,5
Poland
79,8
71,0
19,0
14,6
5,6
8,5
3,0
2,6
Portugal
82,2
75,9
20,2
16,8
8,0
13,4
4,2
4,8
Romania
76,9
69,7
16,9
13,9
2,6
7,2
0,9
2,0
Slovakia
78,4
70,6
17,5
13,6
4,2
8,1
1,5
1,6
Slovenia
82,0
74,7
20,2
15,9
7,8
12,2
4,2
3,9
Hungary
77,8
69,4
17,8
13,7
3,5
6,9
1,8
1,7
Finland
83,1
76,0
21,3
17,0
8,9
13,5
5,3
5,1
Czech Republic
80,2
73,8
18,5
15,1
6,0
11,2
2,5
3,2
Switzerland
84,4
79,5
22,2
18,6
10,1
17,0
6,2
6,7
Sweden
Ukraine
83,1
79,0
20,8
17,9
8,9
16,5
4,8
6,0
74,2
62,5
16,0
11,9
x
x
x
x
Source: State Committee of Statistics of Ukraine, Eourostat
51
52
27
15,625
13,754
10,637
15,563
13,701
10,590
88%
89%
44%
15,608
13,960
10,829
20,270
21,646
12,089
44,662
25,421
2015
91%
45%
15,477
14,032
10,899
20,101
21,449
12,181
44,458
25,051
2016
92%
46%
15,339
14,102
10,965
19,921
21,241
12,272
44,262
24,698
2017
93%
47%
15,195
14,171
11,031
19,734
21,026
12,365
44,063
24,344
2018
48%
15,062
14,219
11,075
19,561
20,826
12,437
43,861
24,036
2019
49%
14,914
14,262
11,113
19,369
20,606
12,500
43,648
23,757
2020
For coverage of “demographic” deficit
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
35%
35%
35%
35%
35%
35%
36%
36%
37%
37%
38%
38%
Size of pension contribution
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
0%
0%
0%
0%
0%
0%
2%
3%
4%
6%
7%
8%
Share of subsidies27
87%
43%
15,734
13,895
10,766
20,434
21,838
12,006
44,871
25,775
2014
37%
87%
42%
15,823
13,834
10,708
20,549
21,978
11,933
45,085
26,116
2013
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
40%
40%
40%
40%
40%
40%
39%
39%
38%
38%
37%
Replacement rate
88%
42%
15,816
13,795
10,672
20,541
22,087
11,887
45,303
26,410
2012
96%
88%
20,292
20,211
88%
22,177
22,186
41%
11,843
11,789
41%
45,527
26,696
45,749
26,977
40%
2011
2010
94%
Retirement age population /
working age population
Pensioners / contribution
payers
Pension system load, %
2009
Main population cohorts, thousand people:
45,963
Total population
27,215
Working age population
Population older than the
11,744
working age
Economically active population 22,199
including employed
20,090
population
Payers of pension contributions 15,469
13,650
Pensioners - Total
10,550
including old age pensioners
Annex 11. Forecast of Pension System’s Financial Sustainability26 Without Changes in Retirement Age
9%
39%
36%
97%
50%
14,772
14,289
11,135
19,185
20,410
12,548
43,421
23,513
2021
53
28
14,369
14,284
11,104
14,501
14,301
11,131
102%
102%
52%
13,972
14,284
11,064
18,145
19,303
12,648
41,725
22,585
2028
103%
53%
13,900
14,285
11,055
18,052
19,204
12,669
41,497
22,484
2029
103%
53%
13,841
14,308
11,069
17,975
19,122
12,720
41,275
22,349
2030
104%
54%
13,787
14,332
11,087
17,905
19,048
12,776
41,057
22,198
2031
104%
54%
13,730
14,342
11,091
17,831
18,969
12,817
40,841
22,050
2032
55%
13,674
14,352
11,095
17,758
18,892
12,859
40,626
21,886
2033
55%
13,611
14,362
11,100
17,677
18,805
12,907
40,413
21,702
2034
For coverage of “demographic” deficit
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
39%
39%
40%
40%
40%
41%
41%
41%
41%
42%
42%
42%
42%
Size of pension contribution
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
10%
11%
11%
12%
13%
13%
14%
14%
15%
15%
16%
16%
17%
Share of subsidies 28
101%
52%
14,050
14,285
11,076
18,247
19,411
12,633
41,959
22,678
2027
33%
100%
52%
14,139
14,282
11,084
18,362
19,534
12,612
42,198
22,777
2026
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
36%
36%
35%
35%
35%
35%
34%
34%
34%
34%
34%
34%
Replacement rate
99%
51%
14,253
14,281
11,091
18,511
19,692
12,593
42,443
22,879
2025
106%
99%
18,661
18,833
98%
19,852
20,035
51%
12,582
12,588
51%
42,691
22,986
42,940
23,122
50%
2024
2023
105%
Retirement age population /
working age population
Pensioners / contribution
payers
Pension system load, %
2022
Main population cohorts, thousand people:
43,186
Total population
23,295
Working age population
Population older than the
12,573
working age
Economically active population 20,214
including employed
19,002
population
Payers of pension contributions 14,631
14,299
Pensioners - Total
including old age pensioners 11,137
(continuing)
17%
42%
33%
106%
56%
13,546
14,386
11,121
17,593
18,716
12,980
40,201
21,477
2035
54
29
13,272
14,459
11,192
13,372
14,419
11,150
113%
114%
65%
12,811
14,632
11,384
16,637
17,699
13,711
38,713
19,362
2042
116%
67%
12,686
14,681
11,443
16,475
17,527
13,841
38,484
19,003
2043
117%
69%
12,553
14,710
11,482
16,302
17,343
13,942
38,246
18,671
2044
119%
71%
12,417
14,724
11,506
16,126
17,155
14,016
37,999
18,363
2045
120%
72%
12,270
14,736
11,530
15,935
16,952
14,084
37,744
18,061
2046
121%
74%
12,125
14,722
11,526
15,747
16,752
14,114
37,482
17,799
2047
75%
11,974
14,685
11,501
15,551
16,544
14,113
37,213
17,570
2048
76%
11,805
14,625
11,452
15,331
16,309
14,079
36,937
17,375
2049
For coverage of “demographic” deficit
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
43%
43%
44%
44%
45%
45%
46%
46%
47%
47%
48%
49%
49%
50%
Size of pension contribution
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
18%
18%
19%
20%
21%
22%
23%
24%
25%
26%
27%
28%
28%
29%
Share of subsidies 29
111%
64%
12,940
14,592
11,338
16,805
17,877
13,595
38,936
19,702
2041
28%
110%
62%
13,060
14,545
11,284
16,962
18,044
13,469
39,152
20,045
2040
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
33%
33%
32%
32%
32%
31%
31%
30%
30%
30%
29%
29%
29%
Replacement rate
109%
60%
13,172
14,498
11,234
17,106
18,198
13,348
39,364
20,376
2039
124%
108%
17,237
17,366
107%
18,337
18,475
59%
13,235
13,120
58%
39,573
20,689
39,782
20,993
57%
2038
2037
123%
Retirement age population /
working age population
Pensioners / contribution
payers
Pension system load, %
2036
Main population cohorts, thousand people:
39,991
Total population
21,240
Working age population
Population older than the
13,052
working age
Economically active population 18,600
including employed
17,484
population
Payers of pension contributions 13,463
14,407
Pensioners - Total
including old age pensioners 11,140
(ending)
30%
50%
28%
125%
76%
11,637
14,550
11,388
15,113
16,078
14,024
36,656
17,204
2050
55
30
15 625
13 754
10 637
15 563
13 701
10 590
81%
80%
36%
15 943
12 784
9 507
20 705
22 110
10 591
26 919
60
60
2015
79%
35%
15 877
12 593
9 261
20 620
22 003
10 320
26 913
60
60
2016
81%
36%
15 738
12 688
9 336
20 439
21 793
10 417
26 554
60
60
2017
82%
37%
15 591
12 799
9 431
20 248
21 573
10 538
26 171
60
60
2018
38%
15 449
12 909
9 527
20 063
21 360
10 663
25 809
60
60
2019
39%
15 288
13 032
9 639
19 855
21 123
10 808
25 449
60
60
2020
For coverage of “demographic” deficit
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
35%
35%
35%
34%
33%
33%
32%
32%
32%
33%
33%
34%
Size of pension contribution
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Share of subsidies 30
83%
37%
16 000
13 007
9 779
20 779
22 207
10 891
26 891
60
60
2014
41%
85%
39%
16 022
13 235
10 050
20 808
22 255
11 190
26 859
60
60
2013
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
40%
40%
40%
42%
43%
43%
44%
44%
44%
43%
42%
Replacement rate
88%
40%
15 948
13 495
10 346
20 711
22 270
11 520
26 777
60
60
2012
85%
88%
20 292
20 211
88%
22 177
22 186
41%
11 843
11 789
41%
26 696
26 977
40%
55
60
2011
55
60
2010
84%
Retirement age population /
working age population
Pensioners / contribution
payers
Pension system load, %
Retirement age, years:
55
women
60
men
Main population cohorts, thousand people:
27 215
Working age population
Population older than the
11 744
working age
Economically active population 22 199
including employed
20 090
population
Payers of pension contributions 15 469
13 650
Pensioners - Total
10 550
including old age pensioners
2009
0%
35%
41%
87%
40%
15 132
13 099
9 731
19 652
20 907
10 921
25 140
60
60
2021
Annex 12. Forecast of Pension System Sustainability After Increasing Retirement Age for Women by 5 Years, Up to 60, at Once in 2012
(rapid option)
56
31
19 083
14 694
13 250
9 836
19 269
14 837
13 227
9 831
92%
93%
43%
14 302
13 281
9 784
18 575
19 760
11 110
24 123
60
60
2028
93%
43%
14 234
13 282
9 763
18 486
19 666
11 106
24 047
60
60
2029
94%
43%
14 181
13 315
9 778
18 416
19 592
11 146
23 923
60
60
2030
95%
44%
14 130
13 347
9 794
18 351
19 522
11 188
23 787
60
60
2031
95%
44%
14 072
13 378
9 811
18 276
19 442
11 233
23 633
60
60
2032
45%
14 017
13 393
9 812
18 204
19 366
11 261
23 484
60
60
2033
45%
13 957
13 416
9 822
18 126
19 283
11 301
23 307
60
60
2034
For coverage of “demographic” deficit
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
35%
36%
36%
36%
37%
37%
37%
37%
38%
38%
38%
38%
38%
Size of pension contribution
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
0%
1%
3%
3%
4%
5%
5%
6%
6%
7%
8%
8%
8%
Share of subsidies 31
92%
43%
14 378
13 271
9 797
18 673
19 865
11 105
24 206
60
60
2027
37%
91%
43%
14 465
13 269
9 815
18 785
19 984
11 108
24 281
60
60
2026
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
40%
39%
39%
39%
38%
38%
38%
38%
37%
37%
37%
37%
Replacement rate
90%
42%
14 577
13 257
9 824
18 932
20 140
11 099
24 373
60
60
2025
96%
89%
20 301
20 498
88%
11 096
11 071
42%
24 473
24 638
42%
60
60
60
60
41%
2024
2023
96%
Retirement age population /
working age population
Pensioners / contribution
payers
Pension system load, %
2022
Retirement age, years:
60
women
60
men
Main population cohorts, thousand people:
24 861
Working age population
Population older than the
11 007
working age
Economically active population 20 692
including employed
19 451
population
Payers of pension contributions 14 977
13 173
Pensioners - Total
9 791
including old age pensioners
(continuing)
9%
39%
36%
97%
46%
13 897
13 447
9 844
18 049
19 201
11 355
23 102
60
60
2035
57
32
46%
22 410
11 514
18 846
17 715
13 641
13 533
9 903
22 656
11 457
18 967
17 829
13 728
13 502
9 881
48%
60
60
60
60
47%
2038
2037
48%
13 549
13 562
9 924
17 597
18 720
11 575
22 148
60
60
2039
49%
13 446
13 609
9 968
17 463
18 577
11 671
21 843
60
60
2040
50%
13 332
13 639
9 997
17 314
18 420
11 754
21 542
60
60
2041
51%
13 207
13 676
10 036
17 152
18 247
11 857
21 216
60
60
2042
53%
13 083
13 746
10 117
16 990
18 075
12 019
20 825
60
60
2043
54%
12 940
13 809
10 192
16 805
17 878
12 169
20 444
60
60
2044
56%
12 792
13 861
10 259
16 613
17 674
12 301
20 078
60
60
2045
58%
12 632
13 927
10 345
16 405
17 453
12 452
19 694
60
60
2046
60%
12 469
13 965
10 402
16 194
17 228
12 562
19 351
60
60
2047
61%
12 301
13 987
10 445
15 975
16 995
12 650
19 033
60
60
2048
31%
31%
30%
115%
63%
12 112
13 979
10 458
15 730
16 734
12 697
18 757
60
60
2049
For coverage of “demographic” deficit
39%
39%
40%
40%
41%
41%
41%
42%
43%
43%
44%
45%
46%
46%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 32
10%
11%
11%
12%
13%
14%
15%
16%
18%
19%
20%
21%
23%
24%
Size of pension contribution
36%
36%
35%
35%
35%
34%
34%
33%
33%
32%
32%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
98%
98%
99%
100%
101%
102%
104%
105%
107%
108%
110%
112%
114%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2036
Retirement age, years:
women
60
men
60
Main population cohorts, thousand people:
Working age population
22 872
Population older than the
11 420
working age
Economically active population 19 088
including employed
17 943
population
Payers of pension contributions 13 816
Pensioners - Total
13 486
including old age pensioners
9 875
Pension system load, %
(ending)
25%
47%
30%
117%
64%
11 929
13 952
10 452
15 492
16 480
12 716
18 511
60
60
2050
58
33
40%
26 696
11 843
22 177
20 292
15 625
13 754
10 637
26 977
11 789
22 186
20 211
15 563
13 701
10 590
41%
55
60
55
60
41%
2011
2010
41%
22 203
20 649
15 900
13 645
10 510
11 704
26 593
55,5
60
2012
40%
22 164
20 723
15 957
13 528
10 373
11 555
26 494
56,0
60
2013
40%
22 101
20 680
15 924
13 441
10 266
11 440
26 342
56,5
60
2014
40%
21 931
20 537
15 814
13 352
10 154
11 322
26 188
57,0
60
2015
40%
21 743
20 376
15 690
13 288
10 065
11 231
26 001
57,5
60
2016
40%
21 614
20 271
15 608
13 236
9 987
11 153
25 818
58,0
60
2017
40%
21 478
20 159
15 522
13 203
9 925
11 096
25 613
58,5
60
2018
40%
21 269
19 978
15 383
13 170
9 864
11 042
25 430
59,0
60
2019
41%
41%
86%
40%
21 031
19 769
15 222
13 142
9 805
10 990
25 267
59,5
60
2020
For coverage of “demographic” deficit
35%
35%
35%
34%
34%
34%
34%
34%
34%
34%
34%
35%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 33
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Size of pension contribution
40%
40%
40%
41%
42%
42%
42%
42%
42%
41%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
88%
88%
88%
86%
85%
84%
84%
85%
85%
85%
86%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2009
Retirement age, years:
women
55
men
60
Main population cohorts, thousand people:
Working age population
27 215
Population older than the
11 744
working age
Economically active population 22 199
including employed population 20 090
Payers of pension contributions 15 469
Pensioners - Total
13 650
including old age pensioners
10 550
Pension system load, %
0%
35%
41%
87%
40%
20 907
19 652
15 132
13 099
9 731
10 921
25 140
60
60
2021
Annex 13. Forecast of Pension System Sustainability Assuming the Increase of the Retirement Age for Women Gradually, by Half a Year
Annually, Up to 60, in 2012-2021 Period
59
11 096
20 301
19 083
14 694
13 250
9 836
11 071
20 498
19 269
14 837
13 227
9 831
42%
24 473
24 638
42%
60
60
60
60
42%
14 577
13 257
9 824
18 932
20 140
11 099
24 373
60
60
2025
43%
14 465
13 269
9 815
18 785
19 984
11 108
24 281
60
60
2026
43%
14 378
13 271
9 797
18 673
19 865
11 105
24 206
60
60
2027
43%
14 302
13 281
9 784
18 575
19 760
11 110
24 123
60
60
2028
43%
14 234
13 282
9 763
18 486
19 666
11 106
24 047
60
60
2029
43%
14 181
13 315
9 778
18 416
19 592
11 146
23 923
60
60
2030
44%
14 130
13 347
9 794
18 351
19 522
11 188
23 787
60
60
2031
44%
14 072
13 378
9 811
18 276
19 442
11 233
23 633
60
60
2032
45%
14 017
13 393
9 812
18 204
19 366
11 261
23 484
60
60
2033
37%
37%
96%
45%
13 957
13 416
9 822
18 126
19 283
11 301
23 307
60
60
2034
35%
36%
36%
36%
37%
37%
37%
37%
38%
38%
38%
38%
38%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 34
0%
1%
2%
3%
4%
5%
5%
6%
6%
7%
7%
8%
8%
Size of pension contribution
40%
39%
39%
39%
38%
38%
38%
38%
37%
37%
37%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
For coverage of “demographic” deficit
Source: Author calculations
34
41%
2024
2023
Pensioners / contribution
88%
89%
90%
91%
92%
92%
93%
93%
94%
94%
95%
96%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2022
Retirement age, years:
women
60
men
60
Main population cohorts, thousand people:
Working age population
24 861
Population older than the
11 007
working age
Economically active population 20 692
including employed
19 451
population
Payers of pension contributions 14 977
Pensioners - Total
13 173
including old age pensioners
9 791
Pension system load, %
(continuing)
9%
39%
36%
97%
46%
13 897
13 447
9 844
18 049
19 201
11 355
23 102
60
60
2035
60
35
46%
22 410
11 514
18 846
17 715
13 641
13 533
9 903
22 656
11 457
18 967
17 829
13 728
13 502
9 881
48%
60
60
60
60
47%
2038
2037
48%
13 549
13 562
9 924
17 597
18 720
11 575
22 148
60
60
2039
49%
13 446
13 609
9 968
17 463
18 577
11 671
21 843
60
60
2040
50%
13 332
13 639
9 997
17 314
18 420
11 754
21 542
60
60
2041
51%
13 207
13 676
10 036
17 152
18 247
11 857
21 216
60
60
2042
53%
13 083
13 746
10 117
16 990
18 075
12 019
20 825
60
60
2043
54%
12 940
13 809
10 192
16 805
17 878
12 169
20 444
60
60
2044
56%
12 792
13 861
10 259
16 613
17 674
12 301
20 078
60
60
2045
58%
12 632
13 927
10 345
16 405
17 453
12 452
19 694
60
60
2046
60%
12 469
13 965
10 402
16 194
17 228
12 562
19 351
60
60
2047
61%
12 301
13 987
10 445
15 975
16 995
12 650
19 033
60
60
2048
31%
31%
115%
63%
12 112
13 979
10 458
15 730
16 734
12 697
18 757
60
60
2049
For coverage of “demographic” deficit
39%
39%
40%
40%
40%
41%
41%
42%
43%
43%
44%
45%
45%
46%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 35
10%
11%
11%
12%
13%
14%
15%
16%
18%
19%
20%
21%
23%
24%
Size of pension contribution
36%
36%
35%
35%
35%
34%
34%
34%
33%
32%
32%
31%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
98%
98%
99%
100%
101%
102%
104%
105%
107%
108%
110%
112%
114%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2036
Retirement age, years:
women
60
men
60
Main population cohorts, thousand people:
Working age population
22 872
Population older than the
11 420
working age
Economically active population 19 088
including employed
17 943
population
Payers of pension contributions 13 816
Pensioners - Total
13 486
including old age pensioners
9 875
Pension system load, %
(ending)
25%
47%
30%
117%
64%
11 929
13 952
10 452
15 492
16 480
12 716
18 511
60
60
2050
61
36
40%
26 696
11 843
22 177
20 292
15 625
13 754
10 637
26 977
11 789
22 186
20 211
15 563
13 701
10 590
41%
55
60
55
60
41%
2011
2010
42%
22 087
20 541
15 816
13 795
10 672
11 887
26 410
55
60
2012
42%
21 978
20 549
15 823
13 834
10 708
11 933
26 116
55
60
2013
43%
21 838
20 434
15 734
13 895
10 766
12 006
25 775
55
60
2014
44%
21 646
20 270
15 608
13 960
10 829
12 089
25 421
55
60
2015
45%
21 449
20 101
15 477
14 032
10 899
12 181
25 051
55
60
2016
46%
21 241
19 921
15 339
14 102
10 965
12 272
24 698
55
60
2017
47%
21 026
19 734
15 195
14 171
11 031
12 365
24 344
55
60
2018
48%
20 826
19 561
15 062
14 219
11 075
12 437
24 036
55
60
2019
37%
37%
96%
49%
20 606
19 369
14 914
14 262
11 113
12 500
23 757
55
60
2020
37%
94%
40%
20 907
19 652
15 132
14 249
10 869
10 921
25 140
60
60
2021
For coverage of “demographic” deficit
35%
35%
35%
35%
35%
35%
36%
36%
37%
37%
38%
38%
38%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 36
0%
0%
0%
0%
0% 0%
2%
3%
4%
6%
7%
8%
7%
Size of pension contribution
40%
40%
40%
40%
40%
40%
39%
39%
38%
38%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
88%
88%
88%
87%
87%
88%
89%
91%
92%
93%
94%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2009
Retirement age, years:
women
55
men
60
Main population cohorts, thousand people:
Working age population
27 215
Population older than the
11 744
working age
Economically active population 22 199
including employed population 20 090
Payers of pension contributions 15 469
Pensioners - Total
13 650
including old age pensioners
10 550
Pension system load, %
Annex 14. Forecast of Pension System Sustainability After Increasing Retirement Age for Women by 5 Years, Up to 60, at Once but Only in
2021 (delayed option)
62
37
41%
24 473
11 096
20 301
19 083
14 694
13 436
10 093
24 638
11 071
20 498
19 269
14 837
13 709
10 360
42%
60
60
60
60
42%
2024
2023
42%
20 140
18 932
14 577
13 257
9 824
11 099
24 373
60
60
2025
43%
19 984
18 785
14 465
13 269
9 815
11 108
24 281
60
60
2026
43%
19 865
18 673
14 378
13 271
9 797
11 105
24 206
60
60
2027
43%
19 760
18 575
14 302
13 281
9 784
11 110
24 123
60
60
2028
43%
19 666
18 486
14 234
13 282
9 763
11 106
24 047
60
60
2029
43%
19 592
18 416
14 181
13 315
9 778
11 146
23 923
60
60
2030
44%
19 522
18 351
14 130
13 347
9 794
11 188
23 787
60
60
2031
44%
19 442
18 276
14 072
13 378
9 811
11 233
23 633
60
60
2032
45%
19 366
18 204
14 017
13 393
9 812
11 261
23 484
60
60
2033
37%
37%
96%
45%
19 283
18 126
13 957
13 416
9 822
11 301
23 307
60
60
2034
36%
96%
46%
19 201
18 049
13 897
13 447
9 844
11 355
23 102
60
60
2035
For coverage of “demographic” deficit
37%
37%
37%
36%
37%
37%
37%
37%
38%
38%
38%
38%
38%
39%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 37
6%
5%
4%
3%
3%
4%
5%
5% 6%
6%
7%
7%
8%
9%
Size of pension contribution
38%
38%
38%
39%
38%
38%
38%
38%
37%
37%
37%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
93%
92%
91%
90%
91%
92%
92%
93%
93%
94%
95%
95%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2022
Retirement age, years:
women
60
men
60
Main population cohorts, thousand people:
Working age population
24 861
Population older than the
11 007
working age
Economically active population 20 692
including employed population 19 451
Payers of pension contributions 14 977
Pensioners - Total
13 980
including old age pensioners
10 618
Pension system load, %
(continuing)
63
38
46%
22 410
11 514
18 846
17 715
13 641
13 533
9 903
22 656
11 457
18 967
17 829
13 728
13 502
9 881
48%
60
60
60
60
47%
2038
2037
48%
13 549
13 562
9 924
17 597
18 720
11 575
22 148
60
60
2039
49%
13 446
13 609
9 968
17 463
18 577
11 671
21 843
60
60
2040
50%
13 332
13 639
9 997
17 314
18 420
11 754
21 542
60
60
2041
51%
13 207
13 676
10 036
17 152
18 247
11 857
21 216
60
60
2042
53%
13 083
13 746
10 117
16 990
18 075
12 019
20 825
60
60
2043
54%
12 940
13 809
10 192
16 805
17 878
12 169
20 444
60
60
2044
56%
12 792
13 861
10 259
16 613
17 674
12 301
20 078
60
60
2045
58%
12 632
13 927
10 345
16 405
17 453
12 452
19 694
60
60
2046
60%
12 469
13 965
10 402
16 194
17 228
12 562
19 351
60
60
2047
61%
12 301
13 987
10 445
15 975
16 995
12 650
19 033
60
60
2048
31%
31%
115%
63%
12 112
13 979
10 458
15 730
16 734
12 697
18 757
60
60
2049
For coverage of “demographic” deficit
39%
39%
40%
40%
40%
41%
41%
42%
43%
43%
44%
45%
45%
46%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 38
9%
10%
11%
12%
13%
14%
15%
16%
17%
19%
20%
21%
22%
24%
Size of pension contribution
36%
36%
35%
35%
35%
34%
34%
34%
33%
32%
32%
31%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
97%
98%
99%
100%
101%
102%
103%
105%
106%
108%
110%
112%
113%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2036
Retirement age, years:
women
60
men
60
Main population cohorts, thousand people:
Working age population
22 872
Population older than the
11 420
working age
Economically active population 19 088
including employed
17 943
population
Payers of pension contributions 13 816
Pensioners - Total
13 486
including old age pensioners
9 875
Pension system load, %
(ending)
25%
47%
30%
117%
64%
11 929
13 952
10 452
15 492
16 480
12 716
18 511
60
60
2050
64
39
40%
26 696
11 843
22 177
20 292
15 625
13 754
10 637
26 977
11 789
22 186
20 211
15 563
13 701
10 590
41%
55
60
55
60
41%
2011
2010
41%
15 900
13 645
10 510
20 649
22 203
11 704
26 593
55,5
60
2012
40%
15 957
13 528
10 373
20 723
22 164
11 555
26 494
56,0
60
2013
40%
15 924
13 441
10 266
20 680
22 101
11 440
26 342
56,5
60
2014
40%
15 814
13 352
10 154
20 537
21 931
11 322
26 188
57,0
60
2015
40%
15 690
13 288
10 065
20 376
21 743
11 231
26 001
57,5
60
2016
40%
15 608
13 236
9 987
20 271
21 614
11 153
25 818
58,0
60
2017
40%
15 522
13 203
9 925
20 159
21 478
11 096
25 613
58,5
60
2018
40%
15 383
13 170
9 864
19 978
21 269
11 042
25 430
59,0
60
2019
41%
41%
86%
40%
15 222
13 142
9 805
19 769
21 031
10 990
25 267
59,5
60
2020
For coverage of “demographic” deficit
35%
35%
35%
34%
34%
34%
34%
34%
34%
34%
34%
35%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 39
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Size of pension contribution
40%
40%
40%
41%
42%
42%
42%
42%
42%
41%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
88%
88%
88%
86%
85%
84%
84%
85%
85%
85%
86%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2009
Retirement age, years:
women
55
men
60
Main population cohorts, thousand people:
Working age population
27 215
Population older than the
11 744
working age
Economically active population 22 199
including employed
20 090
population
Payers of pension contributions 15 469
Pensioners - Total
13 650
including old age pensioners
10 550
Pension system load, %
0%
35%
41%
87%
40%
15 132
13 099
9 731
19 652
20 907
10 921
25 140
60,0
60
2021
Annex 15. Forecast of Pension System Sustainability After Gradual Increasing Retirement Age Up to 62, for Women in the Period 20122021 and for Men in the Period 2022-2025, by Half a Year Annually
65
40
39%
25 308
10 260
20 525
19 293
14 856
12 615
9 114
25 225
10 485
20 710
19 467
14 990
12 776
9 323
37%
61,5
61,5
61,0
61,0
38%
2024
2023
36%
14 818
12 459
8 908
19 245
20 473
10 040
25 433
62,0
62,0
2025
37%
14 694
12 497
8 921
19 084
20 302
10 072
25 317
62,0
62,0
2026
37%
14 603
12 519
8 917
18 964
20 175
10 083
25 228
62,0
62,0
2027
37%
14 525
12 545
8 916
18 864
20 068
10 099
25 135
62,0
62,0
2028
38%
14 454
12 559
8 901
18 772
19 970
10 099
25 054
62,0
62,0
2029
38%
14 404
12 578
8 893
18 706
19 900
10 106
24 963
62,0
62,0
2030
38%
14 359
12 587
8 875
18 648
19 838
10 103
24 871
62,0
62,0
2031
38%
14 310
12 622
8 889
18 585
19 771
10 139
24 728
62,0
62,0
2032
38%
14 255
12 656
8 904
18 514
19 695
10 177
24 568
62,0
62,0
2033
40%
39%
89%
39%
14 195
12 690
8 920
18 435
19 612
10 218
24 390
62,0
62,0
2034
For coverage of “demographic” deficit
34%
34%
34%
34%
34%
34%
35%
35%
35%
35%
35%
36%
36%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 40
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
2%
Size of pension contribution
41%
41%
41%
42%
41%
41%
41%
41%
40%
40%
40%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
86%
85%
85%
84%
85%
86%
86%
87%
87%
88%
88%
89%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2022
Retirement age, years:
women
60,5
men
60,5
Main population cohorts, thousand people:
Working age population
25 163
Population older than the
10 705
working age
Economically active population 20 886
including employed
19 633
population
Payers of pension contributions 15 117
Pensioners - Total
12 939
including old age pensioners
9 529
Pension system load, %
(continuing)
2%
36%
39%
90%
39%
14 136
12 708
8 920
18 359
19 531
10 242
24 215
62,0
62,0
2035
66
41
40%
23 529
10 395
19 188
18 037
13 888
12 816
8 987
23 783
10 331
19 310
18 151
13 977
12 772
8 955
41%
62,0
62,0
62,0
62,0
40%
2038
2037
42%
13 797
12 839
8 996
17 918
19 061
10 432
23 291
62,0
62,0
2039
42%
13 701
12 874
9 020
17 793
18 929
10 487
23 027
62,0
62,0
2040
43%
13 593
12 905
9 042
17 654
18 781
10 545
22 751
62,0
62,0
2041
44%
13 475
12 952
9 085
17 500
18 617
10 636
22 436
62,0
62,0
2042
45%
13 358
12 982
9 114
17 348
18 455
10 714
22 130
62,0
62,0
2043
46%
13 230
13 016
9 151
17 181
18 278
10 809
21 804
62,0
62,0
2044
47%
13 091
13 078
9 228
17 001
18 086
10 962
21 418
62,0
62,0
2045
48%
12 929
13 131
9 300
16 791
17 863
11 101
21 044
62,0
62,0
2046
50%
12 766
13 176
9 365
16 579
17 637
11 226
20 688
62,0
62,0
2047
51%
12 593
13 235
9 449
16 354
17 398
11 369
20 314
62,0
62,0
2048
33%
33%
107%
53%
12 392
13 265
9 505
16 093
17 120
11 472
19 982
62,0
62,0
2049
For coverage of “demographic” deficit
36%
37%
37%
37%
38%
38%
38%
39%
39%
40%
41%
41%
42%
43%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 41
3%
4%
5%
5%
6%
7%
8%
9%
11%
12%
13%
15%
16%
18%
Size of pension contribution
39%
39%
38%
38%
37%
37%
37%
36%
36%
35%
35%
34%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
91%
91%
92%
93%
94%
95%
96%
97%
98%
100%
102%
103%
105%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2036
Retirement age, years:
women
62,0
men
62,0
Main population cohorts, thousand people:
Working age population
24 013
Population older than the
10 279
working age
Economically active population 19 428
including employed
18 262
population
Payers of pension contributions 14 062
Pensioners - Total
12 736
including old age pensioners
8 932
Pension system load, %
(ending)
19%
44%
32%
109%
54%
12 196
13 280
9 547
15 839
16 850
11 553
19 674
62,0
62,0
2050
67
42
11 843
22 177
20 292
15 625
13 754
10 637
11 789
22 186
20 211
15 563
13 701
10 590
40%
21 931
20 537
15 814
13 352
10 154
11 322
26 188
57,0
60
40%
21 743
20 376
15 690
13 288
10 065
11 231
26 001
57,5
60
2016
40%
21 614
20 271
15 608
13 236
9 987
11 153
25 818
58,0
60
2017
40%
21 478
20 159
15 522
13 203
9 925
11 096
25 613
58,5
60
2018
21 269
19 978
15 383
13 170
9 864
11 042
25 430
59,0
60
2019
21 031
19 769
15 222
13 142
9 805
10 990
25 267
59,5
60
2020
41%
For coverage of “demographic” deficit
35%
35%
35%
34%
34%
34%
34%
34%
34%
34%
34%
35%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 42
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Size of pension contribution
40%
40%
40%
41%
42%
42%
42%
42%
42%
41%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
41%
40%
22 101
20 680
15 924
13 441
10 266
11 440
26 342
56,5
60
2015
Replacement rate
40%
22 164
20 723
15 957
13 528
10 373
11 555
26 494
56,0
60
2014
86%
41%
22 203
20 649
15 900
13 645
10 510
11 704
26 593
55,5
60
2013
Pensioners / contribution payers
88%
88%
88%
86%
85%
84%
84%
85%
85%
85%
86%
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
41%
26 696
26 977
41%
55
60
55
60
2012
40%
40%
2011
2010
40%
Retirement age population /
working age population
2009
Retirement age, years:
women
55
men
60
Main population cohorts, thousand people:
Working age population
27 215
Population older than the
11 744
working age
Economically active population
22 199
including employed population
20 090
Payers of pension contributions
15 469
Pensioners - Total
13 650
including old age pensioners
10 550
Pension system load, %
0%
35%
41%
87%
40%
20 907
19 652
15 132
13 099
9 731
10 921
25 140
60,0
60
2021
Annex 16. Forecast of Pension System Sustainability After Gradual Increasing Retirement Age Up to 65, For Women in the Period 20122031 and For Men in the Period 2022-2031, by Half a Year Annually
68
43
39%
25 308
10 260
20 525
19 293
14 856
12 615
9 114
25 225
10 485
20 710
19 467
14 990
12 776
9 323
37%
61,5
61,5
61,0
61,0
38%
2024
2023
36%
14 818
12 459
8 908
19 245
20 473
10 040
25 433
62,0
62,0
2025
35%
14 784
12 300
8 692
19 200
20 426
9 807
25 582
62,5
62,5
2026
34%
14 697
12 146
8 480
19 087
20 305
9 578
25 733
63,0
63,0
2027
33%
14 624
11 993
8 262
18 992
20 205
9 342
25 891
63,5
63,5
2028
32%
14 633
11 842
8 046
19 004
20 217
9 108
26 046
64,0
64,0
2029
31%
14 660
11 702
7 834
19 039
20 255
8 879
26 190
64,5
64,5
2030
30%
14 621
11 560
7 623
18 989
20 201
8 649
26 326
65,0
65,0
2031
31%
14 569
11 645
7 615
18 921
20 128
8 647
26 219
65
65
2032
31%
14 521
11 667
7 606
18 858
20 062
8 650
26 095
65
65
2033
44%
44%
81%
31%
14 467
11 679
7 586
18 788
19 988
8 642
25 966
65
65
2034
For coverage of “demographic” deficit
34%
34%
34%
34%
33%
33%
33%
32%
32%
32%
32%
32%
32%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 43
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Size of pension contribution
41%
41%
41%
42%
42%
43%
43%
43%
44%
45%
44%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
86%
85%
85%
84%
83%
83%
82%
81%
80%
79%
80%
80%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2022
Retirement age, years:
women
60,5
men
60,5
Main population cohorts, thousand people:
Working age population
25 163
Population older than the
10 705
working age
Economically active population 20 886
including employed
19 633
population
Payers of pension contributions 15 117
Pensioners - Total
12 939
including old age pensioners
9 529
Pension system load, %
(continuing)
0%
33%
43%
81%
31%
14 417
11 716
7 598
18 724
19 919
8 671
25 786
65
65
2035
69
44
31%
25 160
8 764
19 579
18 405
14 172
11 813
7 630
25 372
8 742
19 698
18 516
14 257
11
7 627
32%
65
65
65
65
32%
2038
2037
33%
14 087
11 847
7 643
18 295
19 463
8 801
24 923
65
65
2039
33%
13 991
11 887
7 668
18 171
19 331
8 851
24 663
65
65
2040
34%
13 885
11 932
7 700
18 032
19 183
8 911
24 386
65
65
2041
34%
13 766
11 955
7 708
17 878
19 020
8 943
24 130
65
65
2042
35%
13 660
11 988
7 730
17 740
18 872
8 992
23 853
65
65
2043
35%
13 537
12 015
7 749
17 580
18 702
9 042
23 571
65
65
2044
36%
13 406
12 052
7 787
17 410
18 522
9 121
23 258
65
65
2045
37%
13 257
12 071
7 810
17 217
18 316
9 187
22 959
65
65
2046
37%
13 107
12 093
7 844
17 022
18 109
9 270
22 643
65
65
2047
38%
12 941
12 140
7 916
16 807
17 880
9 410
22 273
65
65
2048
38%
37%
96%
39%
12 741
12 179
7 985
16 547
17 603
9 538
21 916
65
65
2049
For coverage of “demographic” deficit
33%
33%
33%
34%
34%
34%
35%
35%
36%
36%
36%
37%
38%
38%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 44
0%
0%
0%
0%
0%
0%
0%
0%
1%
2%
3%
5%
6%
8%
Size of pension contribution
43%
43%
42%
42%
41%
41%
41%
40%
40%
39%
39%
38%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
82%
83%
83%
84%
85%
86%
87%
88%
89%
90%
91%
92%
94%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2036
Retirement age, years:
women
65
men
65
Main population cohorts, thousand people:
Working age population
25 588
Population older than the
8 704
working age
Economically active population 19 814
including employed
18 625
population
Payers of pension contributions 14 342
Pensioners - Total
11 752
including old age pensioners
7 611
Pension system load, %
(ending)
10%
39%
36%
97%
41%
12 541
12 208
8 046
16 287
17 326
9 652
21 576
65
65
2050
70
45
11 532
22 395
20 492
15 779
13 493
10 357
11 789
22 186
20 211
15 563
13 701
10 590
36%
22 160
20 752
15 979
12 707
9 448
10 535
26 975
57,5
62,5
35%
22 062
20 676
15 920
12 538
9 241
10 310
26 922
58,0
63,0
2016
35%
21 955
20 591
15 855
12 398
9 058
10 113
26 857
58,5
63,5
2017
34%
21 784
20 446
15 744
12 262
8 878
9 921
26 789
59,0
64,0
2018
21 621
20 308
15 637
12 138
8 706
9 737
26 735
59,5
64,5
2019
21 489
20 200
15 554
12 013
8 530
9 550
26 707
60,0
65,0
2020
45%
For coverage of “demographic” deficit
35%
35%
34%
33%
33%
32%
32%
32%
31%
31%
31%
31%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 45
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Size of pension contribution
40%
41%
43%
43%
44%
44%
45%
45%
45%
40%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
46%
37%
22 295
20 862
16 064
12 886
9 664
10 771
27 011
57,0
62,0
2015
Replacement rate
38%
22 376
20 922
16 110
13 081
9 890
11 017
27 032
56,5
61,5
2014
77%
39%
22 394
20 826
16 036
13 281
10 120
11 271
27 026
56,0
61,0
2013
Pensioners / contribution payers
88%
88%
86%
83%
81%
80%
80%
79%
78%
78%
78%
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
40%
27 007
26 977
41%
55,5
60,5
55
60
2012
33%
40%
2011
2010
34%
Retirement age population /
working age population
2009
Retirement age, years:
women
55
men
60
Main population cohorts, thousand people:
Working age population
27 215
Population older than the
11 744
working age
Economically active population
22 199
including employed population
20 090
Payers of pension contributions
15 469
Pensioners - Total
13 650
including old age pensioners
10 550
Pension system load, %
0%
31%
46%
77%
33%
21 370
20 087
15 467
11 974
8 452
9 472
26 588
60,5
65,0
2021
Annex 17. Forecast of Pension System Sustainability After Gradual Increasing Retirement Age Up to 65, For Women In the Period 20112030 and For Men In the Period 2011-2020, by Half a Year Annually
71
46
33%
26 338
9 230
20 833
19 583
15 079
11 859
8 208
26 398
9 312
20 957
19 700
15 169
11 897
8 290
32%
62,0
65,0
61,5
65,0
32%
2024
2023
32%
15 009
11 832
8 135
19 492
20 736
9 159
26 313
62,5
65,0
2025
32%
14 880
11 799
8 056
19 324
20 557
9 080
26 309
63,0
65,0
2026
31%
14 779
11 757
7 962
19 193
20 418
8 984
26 327
63,5
65,0
2027
31%
14 747
11 712
7 863
19 152
20 375
8 883
26 351
64,0
65,0
2028
31%
14 725
11 654
7 748
19 123
20 343
8 762
26 392
64,5
65,0
2029
30%
14 667
11 591
7 625
19 048
20 264
8 633
26 436
65,0
65,0
2030
30%
14 621
11 625
7 628
18 989
20 201
8 649
26 326
65,0
65,0
2031
31%
14 569
11 645
7 615
18 921
20 128
8 647
26 219
65,0
65,0
2032
31%
14 521
11 667
7 606
18 858
20 062
8 650
26 095
65,0
65,0
2033
44%
44%
81%
31%
14 467
11 679
7 586
18 788
19 988
8 642
25 966
65,0
65,0
2034
For coverage of “demographic” deficit
31%
31%
31%
32%
32%
32%
32%
32%
32%
32%
32%
32%
32%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 46
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Size of pension contribution
45%
45%
45%
45%
44%
44%
44%
44%
45%
44%
44%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
78%
78%
79%
79%
79%
80%
79%
79%
79%
80%
80%
80%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2022
Retirement age, years:
women
61,0
men
65,0
Main population cohorts, thousand people:
Working age population
26 475
Population older than the
9 393
working age
Economically active population 21 154
including employed
19 885
population
Payers of pension contributions 15 311
Pensioners - Total
11 936
including old age pensioners
8 372
Pension system load, %
(continuing)
0%
33%
43%
81%
31%
14 417
11 716
7 598
18 724
19 919
8 671
25 786
65,0
65,0
2035
72
47
31%
25 160
8 764
19 579
18 405
14 172
11 813
7 630
25 372
8 742
19 698
18 516
14 257
11 789
7 627
32%
65
65
65
65
32%
2038
2037
33%
14 087
11 847
7 643
18 295
19 463
8 801
24 923
65
65
2039
33%
13 991
11 887
7 668
18 171
19 331
8 851
24 663
65
65
2040
34%
13 885
11 932
7 700
18 032
19 183
8 911
24 386
65
65
2041
34%
13 766
11 955
7 708
17 878
19 020
8 943
24 130
65
65
2042
35%
13 660
11 988
7 730
17 740
18 872
8 992
23 853
65
65
2043
35%
13 537
12 015
7 749
17 580
18 702
9 042
23 571
65
65
2044
36%
13 406
12 052
7 787
17 410
18 522
9 121
23 258
65
65
2045
37%
13 257
12 071
7 810
17 217
18 316
9 187
22 959
65
65
2046
37%
13 107
12 093
7 844
17 022
18 109
9 270
22 643
65
65
2047
38%
12 941
12 140
7 916
16 807
17 880
9 410
22 273
65
65
2048
38%
37%
96%
39%
12 741
12 179
7 985
16 547
17 603
9 538
21 916
65
65
2049
For coverage of “demographic” deficit
33%
33%
33%
34%
34%
34%
35%
35%
36%
36%
36%
37%
38%
38%
Share of the State Budget funds in financing of pensions (over subsidies on additional pension programs) under condition of unchanged size of pension contribution and 40%
reproduction rate, %
Share of subsidies 47
0%
0%
0%
0%
0%
0%
0%
0%
1%
2%
3%
5%
6%
8%
Size of pension contribution
43%
43%
42%
42%
41%
41%
41%
40%
40%
39%
39%
38%
Size of pension contribution which is needed for support of reproduction coefficient at the level of 40% and deficit-free budget of the Pension Fund
Replacement rate
Pensioners / contribution
82%
83%
83%
84%
85%
86%
87%
88%
89%
90%
91%
92%
94%
payers
Share of the insurance part of pension and wage under condition of unchanged size of pension contribution (35.2%) and deficit-free budget of the Pension Fund
Retirement age population /
working age population
2036
Retirement age, years:
women
65
men
65
Main population cohorts, thousand people:
Working age population
25 588
Population older than the
8 704
working age
Economically active population 19 814
including employed
18 625
population
Payers of pension contributions 14 342
Pensioners - Total
11 752
including old age pensioners
7 611
Pension system load, %
(ending)
10%
39%
36%
97%
41%
12 541
12 208
8 046
16 287
17 326
9 652
21 576
65
65
2050
The European Union is made up of 27 Member States who have decided to gradually link together their
knowhow, resources and destinies. Together, during a period of enlargement of 50 years, they have built a zone
of stability, democracy and sustainable development whilst maintaining cultural diversity, tolerance and
individual freedoms. The European Union is committed to sharing its achievements and its values with
countries and peoples beyond its borders". For more information about the EU:http://delukr.ec.europa.eu
***
The UN Development Programme (UNDP) is the UN's global development network, advocating for change
and connecting countries to knowledge, experience and resources to help people build a better life. We are on
the ground in 166 countries, working with them on their own solutions to global and national development
challenges. As they develop local capacity, they draw on the people of UNDP and our wide range of partners.
In Ukraine, four development focus areas define the structure of UNDP's assistance activities. These include
democratic governance; prosperity, poverty reduction and MDGs; local development and human security; and
energy and environment. In each of these thematic areas, UNDP ensures balance between policy and
advocacy work, capacity development activities and pilot projects. For more information about the UNDP in
Ukraine: www.undp.org.ua
***
The Blue Ribbon Analytical and Advisory Centre (BRAAC) is a project funded by the European Union,
co-funded and implemented by UNDP. The Centre is an independent institution that adheres in its activities
to the principles of free and democratic market economy. It combines in-house expertise with that of leading
national and international experts, and think-tanks. The Centre strengthens the national capacity in policy
formulation and implementation by working with government officials and coordinates its activities with
other donor organizations to ensure efficient use of resources. The Centre facilitates the emergence of
public-private partnerships in the development of key policy measures, thereby providing a voice for civil
society in the decision-making process. For more information on Centre’s activity please visit Centre’s website
http://brc.undp.org.ua or call +380 44 253 58 66
This publication was prepared by the Blue Ribbon Analytical and Advisory
Centre, a project funded by EU, co-funded and implemented by United
Nations Development Programme in Ukraine. The opinions, conclusions or
recommendations are those of authors and do not necessarily reflect the
views of United Nations Development Programme.
This publication has been produced with the assistance of the European
Union. The contents of this publication are the sole responsibility of the
Blue Ribbon Analytivcal and Advisory Centre and can in no way be taken
to reflect the views of the European Union.
Blue Ribbon Analytical and Advisory Centre
Project is funded by the EU and co-financed and implemented by the UNDP
DEMOGRAPHIC AND FINANCIAL
PRECONDITIONS OF THE PENSION
REFORM IN UKRAINE:
FORECAST – 2050
Kyiv - 2010