UAC analytical center "Smart Country" conducted a modeling of pension expenditures in Ukraine for the period 2020-2035. The results of research during an online meeting about discussion on pension reform were presented by UAC Deputy Chairman Mykhailo Sokolov.

"We at the Institute of the Future have been working for several months to calculate what will happen to our pension system in the event that the innovation scenario is not implemented. Roughly speaking, nothing will change and everything will develop as it has developed before," Mykhailo Sokolov said.

So, if you do not carry out pension reform, by 2035:

• the number of retirees will increase by 5 million
• the number of insured persons will decrease by 2 million
• the number of insured persons for one pensioner will be halved (from 1.07 to 0.57)
• the deficit of the solidarity system will increase to UAH 193 billion
• expenditures of the state budget on the Pension Fund will increase by UAH 257 billion
• in 2027, all pensioners will receive a minimum pension of UAH 2,000, if the state budget expenditures remain at the current level and at the same time the funding of the Pension Fund does not increase.

Experts of the analytical center also analyzed the concepts of pension reform proposed by the Verkhovna Rada of Ukraine, the Cabinet of Ministers of Ukraine and the Ukrainian Institute of the Future. All of them provide for the introduction of the second, accumulative, level of the pension system. It is based on the accumulation of funds in the personal account of the employee, which he can use after retirement. The concepts of the Cabinet of Ministers and the Institute of the Future propose to make such deductions by taxes reducing - value added tax (VAT) or the single social contribution (SSC). The concept of the parliament proposes to deduct funds from employees' salaries, without reducing taxes:

1. The concept of the Cabinet of Ministers envisages the personal income tax rate reduction by 2% and the SSC rate by 2%;
2. Ukrainian Institute of the Future concept proposes the SSC rate reduction by 2%, and from 2026 - by 10%.
3. According to the concept of the Verkhovna Rada, it is proposed to make additional deductions from employees' salaries initially at the level of ~ 3%, and from 2030 - ~ 4%

"We looked at how many current employees will be able to receive a funded pension above 2 thousand hryvnias in 2020 prices in the case of the implementation of a concept. If the system proposed by the Verkhovna Rada is implemented, it will be 6%. In the concept of the Cabinet of Ministers, we do not get the best figures - 4.6%, because there are only 4% of total contributions, so even fewer people will be able to expect that their funded pension will exceed 2 thousand hryvnia. And the last option is the concept proposed by the Institute of the Future. We see the obvious thing that although in general this reform is more expensive, but even if we do not take into account additional GDP growth, 21% of people will be able to receive more than UAH 2,000 in 2020 prices by the time they retire,” Mykhailo Sokolov said.

According to UAC Deputy Chairman, the calculations show several important things:

"First of all, we can't delay in dealing with the reform and it needs to be carried out. Second, for a reform to be successful, it must increase economic activity, not decrease it. After all, to solve the problem without involving in the financing of both the solidarity and savings systems of those people who are not currently working - such a reform is impossible. And thirdly, it may be worth not to involve everyone in the storage system. According to research, for many of them, it will not give anything for quite objective reasons. That is, the supplement will be so small that it may cause people more irritation from the reform and its rejection than a positive attitude," Mikhail Sokolov said.