Too early to launch defined contribution pension reform – Finance minister

The launch of the defined contribution pension reform is possible only solving the problem of the pay-as-you-go pension system, Ukrainian Finance Minister Oleksandr Danyliuk has said.

"With the current state of the [stock] market we would spend money in vain. We will act in the following way: first we solve problems of the -as-you-go pension system and then… we will think what to do with the defined contribution pension," he said in an interview with Interfax-Ukraine.

Danyliuk said that the problem that requires urgent solution is the pay-as-you-go pension system.

"Here the position of the IMF [the International Monetary Fund] and our position coincide. Until we do not stabilize the pay-as-you-go pension system we cannot afford playing the second level. Now we should solve the problems, and not worsen the already difficult situation," the minister said.

He said that attempts to build the financial market in Ukraine today are slightly fruitful.

"My colleagues who came to the National Commission for Securities and the Stock Market a couple of years ago had a dream to build the financial market, but it occurred that there was nothing to use for this," Danyliuk said. He said that in other conditions, without the problems in the pay-as-you-go pension system, he would have backed their position that there is a necessity of introducing the second and third levels of the pension system, but it is too early now.

As reported, Ukraine does not have the second level of the pension system – the obligatory defined contribution pension system. The total cost of assets accumulated by nongovernmental pension funds at the third – voluntary defined contribution pension system – was UAH 2.14 billion as of late 2016. This was 8% more than in 2015 and 13.4% less than in 2014. The budget of the Pension Fund of Ukraine in 2016 was UAH 254.9 billion.

Deputy Prime Minister Pavlo Rozenko insists on the quick launch of the second level of the pension system, while the IMF opposes this.