The Ukrainian pension system has three main pillars: 1) state pension related to wages and financed via payroll taxes, 2) mandatory funded (accumulation) pension provision based on occupational pension schemes (not yet functioning!), and 3) non-state voluntary pension provision.

First pillar:

State pension from age 60 (may be 63 or 65 if the service period is less than 15-35 years)

  • Mandatory (“pay-as-you-go”) DB (state) pension plan is administered by The State Pension Fund of Ukraine (PFU).
  • Participants: 100% employers and employees (including self-employees).
  • The pension contribution rate is 18,85% of wages.
  • Average replacement ratio: 30%

Second pillar:

Mandatory funded (accumulation system) pension provision

  • DC pension plan based on individual investments in non-state pension funds (NPF), with compulsory participation by employees and employers.
  • Second pillar will start no earlier than 2022.
  • The rate of pension payment is expected to be about 7% per salary.
  • Projected average replacement ratio: up to 15%

Third pillar:

Non-state voluntary pension provision

  • The non-state pension provision system will be a component of the accumulation pension provision system based on the voluntary participation of individuals and entities. Non-state pension provision exercises by pension funds (NPF), insurance companies and banks.
  • Taxation system: E-E-T