The subject of a funded pension provision the leadership of our country for years just to overlook. Neither information campaigns nor the relevant sections on the official site. Even the non-state pension funds (NFP) seems to be in no hurry to advertise themselves.
This “protoinstance” existence does not increase the trust of Ukrainians to these organizations. So, it is likely that working people will soon realize the seriousness be left without a pension (or with a meager pension) old age. Because for many years they have listened to promises to increase pensions, to bring to a real living wage, differentiated, depending on salary. And perhaps hope that when the time comes to say goodbye to work, these promises certainly will be fulfilled. Or simply not think about tomorrow.
Recently, a friend, a woman of 50, said that he had gone to “my account” on the portal of the Pension Fund and was shocked by the information that they saw. According to her, earlier, when she heard about the new requirements for experience, know works with 17 years old, has 30 years of experience you already have, decent wages, and so pensions will be rather big. But it turned out that PFCs other data. According to information in her personal account, insurance experience, women have not reached 15 years. Until 2004, the experience you need to prove for the workbook, and since 2004 part time, as it turned out, she was working without formal employment, but part-time employer drew her minimum salary and paid to the Fund the minimum premium. In the end, she calculated that a pension can only count after 70 years, and then at the minimum. And, while there is a margin time and a good salary, I started looking for what retirement programs are offered by various financial organizations. It turned out that information about them is very little.
Why is not being actively promoted voluntary-funded pensions? Is the government not interested in the fact that Ukrainians have become less dependent on budgetary payments, which every year eat an increasing part of the budget? Or the NPF is not interested in growth of number of clients? We asked about this the experts. And that hinders the development of the third level of pensions in Ukraine.
“Politicians cheaper to buy votes for the promise of another increase of pensions, instead help to save the pension independently”
Tatiana Salnikova, head of the Council of the Ukrainian Association of administrators of pension funds:
— State since 2003, since the adoption of the law on accumulative pensions has not carried out any activities promoting personal savings for retirement. Despite the fact that the personal retirement savings of the people help the state to solve one of its main objectives is to provide a decent standard of living for its citizens, including after the termination of labour. But politicians cheaper to buy voters for unfulfilled promises the next increase of pensions, instead help to save the pension on their own and not depend on handouts from the following “authorities”.
As for the private sector, there are individual initiatives: regional press-clubs, public lectures in financial literacy on this topic, the advertising campaign of the individual funds. But funds to Finance such activities of non-state pension funds (NFP) needs somewhere to look. Because the funds are non – profit institutions and have no right to spend people’s money. Fund founders also have no profit from the activities of the Fund. Administrators, asset management companies (companies managing assets – Ed.) and banks-custodians of the funds for such activities are also extremely limited as the assets of the NPF to date, small, and rewards AMC, ACE and the custodian Bank are limited. Therefore, the private sector carries the system information of the activities to promote non-state pension provision due to the lack of funds for this.
To the number of participants in private pension funds has expanded, it is necessary that people understand the state pension they have or not, or she’s gonna be like that in normal life it is not enough. Unless one is aware of the problem, “forcibly” impose pension reforms almost impossible.
When will this realization, people will be interested in the funds, to compare different tools. Choose a convenient, reliable, the most controlled. And, for example, for me, is the most reliable tool that I personally can influence, and which I myself can control.
Of course, a big step for the development of private pension savings would be a system information program by the state and the introduction of the second pillar of the pension system – just a culture of conscious accumulation of choice of Fund for yourself and the like.
Well, another important reason for the proliferation of retirement savings – low income people. People mostly do not save.
“The development of the NPF, nothing prevents, in addition to lack of integrity of the state and politicians”
Oleg Likhovid, coordinator of the Foundation Ludwig Erhard:
— This question of the state does not apply. Because NPF – non-state and “take advantage” there is no place. Therefore, there is no information. The development of the NPF, nothing prevents, in addition to lack of integrity of the state and politicians. That is their honest statement: “Citizens! The state is not able under the current pension system to provide you with a decent pension. For various reasons, and not economic. Will only last so miserable as now. So accumulate as much as they can. Better in the NPF. They just for this purpose and developed”. You can still call a lot of things that would help people. But we must start with honesty. The rescue of drowning – the handiwork of drowning.
“There is a problem with trust level”
Paul Matiyash, Deputy Director business development financial company “Activitis”:
— Using only the joint system, which Ukraine inherited after the collapse of the USSR, power has long been unprofitable to popularize other levels of the pension system. Legislation that allowed the NPF to conduct its activities in Ukraine, appeared only in 2004. Now having problems with the demographics of the country and the growing hole in the PFC, which is about 170 billion, and that it is necessary to close the financing from the budget, the state begins to gradually promote the third level – voluntary savings, and make more active steps for the launch of the second pillar of the pension system. But for significant expansion of the range of clients pension funds and many other financial institutions now lack the financial literacy of the population. It is the citizens at a low level.
Of course, changes for the better occur, the awareness is growing, however slowly. And it should be said that not only the government (through regulators) and professional associations of market participants need to exert effort in education, but all financial institutions also have to prepare responsible and knowledgeable customers.
In addition, there is a problem with the level of confidence. Unfortunately, in our country citizens are not just faced with serious problems such as loss, total or partial loss of the invested capital for different reasons. Therefore, all we must also work to restore citizens ‘ trust in financial institutions, but this long way.
“Assets can not only rise in price or fall”
Alexander Khmelevsky, candidate of economic Sciences, independent expert:
— In my opinion, to make savings in private pension funds unsafe. Only in recent years we have seen the bankruptcy of dozens of banks, despite the fact that the national Bank closely monitors the banking system. As for pension funds, the control over them is much less. The pension Fund needs to exist long enough period, at least 50 years. That is about 35 years of work, when carried out, deductions, and another 15 – 20 years of receiving benefits. The period of placement of funds is very long. During this period, with the Fund can happen anything.
Another risk is the devaluation of the hryvnia. Over the years, the hryvnia has depreciated by 20 times relative to the U.S. dollar. To save money on depreciation, the Fund should yield more than 30% per annum. Making money is very difficult, and such an operation can be very risky. That is, even if the Fund does not go bankrupt, then your money will be impaired. Another problem are the investment risks. The assets may either rise in price or fall. In particular, during the global 2008 crisis, American pension funds have lost more than 2 trillion dollars of their depositors. Therefore, even skilled and experienced managers can lose your money. Actually, because of all these risks, private pension funds did not get popularity in the Ukrainian society.
For the development of non-state pension provision should be provided the stability of the financial system and credibility from the population. Unfortunately, to achieve this in the current environment is very difficult. One financial crisis negates the years of successful work. You should also ensure long-term stability of the hryvnia. In addition, there must be a reliable and sufficiently large market of financial instruments.