The Pension System of Ukraine: On Its Way to a Fundamental Reform

• Author: Mykhailo Shumylo
• Pages: 103-112

103

JURIDICA INTERNATIONAL 26/2017

Mykhailo Shumylo

Doctor of Law, Senior Research Fellow

V.M. Koretsky Institute of State and Law

National Academy of Sciences of Ukraine

The Pension System of Ukraine:

On Its Way to a Fundamental

Reform

1. Introduction

Since the introduction of the f‌i rst pension laws, no country has achieved perfection, and if it has reached

high e ciency of the pension system, then over time that has still had to be modif‌i ed in line with economic

requirements. The Ukrainian pension system was formed in the era of industrialisation, rapid population

growth, and the administrative-planned economy. Although it should be noted that until 1939, in the

territory of today’s western Ukraine, which was part of the Second Polish Republic, a very ef‌f ective and,

for the inter-war period, progressive pension system was functioning in Europe. The collapse of the Soviet

Union and the transition to a market economy, persistent economic and demographic crises, and political

instability (through which, among other things, pension reform became a hostage to political speculation

and the f‌l owering of social populism) led to the fact that in more than 25 years of independence of Ukraine,

an ef‌f ective pension system that would guarantee decent pensions to the citizens was not created. The

research presented here is an attempt to summarise the history and current state of pension reform in

contemporary Ukraine, and to point out vital issues that are being resolved and ones that still need to

be addressed. An important aspect of understanding the correctness or inappropriateness of the reforms’

direction is the conformity of newly valid legal acts to international standards in the social sphere.

2. The place of Ukraine’s pension provision

in the globalised world

Pension provision is one element of the economic system of Ukraine. The rights to pension are among the

key social rights def‌i ned by the Constitution of Ukraine and the laws of Ukraine, rights that not only are pro-

claimed or declared but also are implemented in practice and af‌f ect each person who is an active participant

in public life.

The supreme law of the land declares Ukraine to be a welfare state, and its second section clearly states

that citizens have the right to social security, which includes the right to be f‌i nancially supported in the

event of complete, partial, or temporary disability; widowhood; unemployment as a result of circumstances

beyond their control; old age; and other circumstances envisaged by law. This right is guaranteed via

https://doi.org/10.12697/JI.2017.26.11