700 hryvnias per Ukrainian. How the government will patch the hole in the Pension Fund and what will happen to pensions

По 700 гривен с каждого украинца. Как власти будут латать дыры в Пенсионном фонде и что будет с пенсиями

The Pension Fund short of money. Thursday, January 16, the Cabinet approved a budget of $ 398,2 billion. Thus own means of the Fund is much smaller – only about 230,6 billion.

The “hole” traditionally plan to patch the budget. In 2019 all taxpayers of the country will reset to pensions 167,5 billion. It is 28.2 billion more than last year. The constant growth of budget allocations in the PF is alarming experts.

“Pension Fund simply “broke”. Budget subsidies suggests that the pension reform in Ukraine, to put it mildly, has failed,” says economist Alex Kush.

In practice, this means that it is possible irregular payment of pensions. Because of budget injections to the pension Fund by no means guaranteed. In addition, the Treasury is simply no money. “Now I have to figure out where to get the money to Finance the Pension Fund. Most likely, it will be new taxes and raising rates of existing levies, the pressure on the business and an unspoken command, the fiscal service to collect more money,” he explained, “the Country,” head of the Secretariat of the Council of entrepreneurs under the Cabinet of Ministers Andrei Zablovsky.

“Country” understood how to patch holes in the Pension Fund and what will happen to pensions.

Why is the hole in the PF

As stated in the explanatory note to the resolution of Cabinet of Ministers “On approval of the budget of the Pension Fund for the year 2019”, the total revenues of the PF will be slightly more than 398 billion. Of these, almost 100 billion – bridging residues with 2018, 230,6 billion own revenues.

The last article consists almost entirely of a single social contribution, which is paid to the pension Fund all working Ukrainians and entrepreneurs. In 2019 ERUs are planning to get 225 billion. For comparison: last year the Pension Fund received from the unified social contribution of UAH 208.3 billion. That is, the income will grow, but not much – only on 16.7 billion UAH. or about 8%, which is unlikely to even cover the rate of real inflation (it is expected at 9-10%, although the budgeted figure of 7.4%). The indicator 225 billion is forecast – it was calculated on the basis of estimates of the Ministry of Finance total salary Fund and salaries for servicemen this year (1149 bln.).

In reality, it risks being less. “For example, last year the plans for the collection of ERUs was not fulfilled – instead of the 208 billion received 196 billion most Likely, the main reason is that I overestimated the wage Fund and number of employees. Ukrainians actively migrate and it already felt. And since this process is ongoing – contributions to the pension Fund can also be reduced,” said economist Viktor Skarshevsky.

“The question to the authorities – as in the claimed GDP growth of 3% per year and, allegedly, the increase in real incomes, the income of the Pension Fund have been increasing slightly”, – says Alexei Kusch.

According to him, the budget “broke” after the reform of ERUs in 2016. Then, under pressure from big business rate has reduced by almost half in the calculation of deregulating the economy and increase tax revenues. But these expectations are not met.

“The result was disastrous – the pension Fund deficit increased from 60 bln. initially, up to 130 billion, and now has almost 170 billion. No detail has not happened. And since ERU is charged on the total salary Fund, won’t even ordinary Ukrainians, and a large company. They save on tax up to UAH 2 billion. a year” – calculated Alexei Kusch.

In his opinion, a reduction of ERUs for detail of salaries was not enough, and other methods (including control) state is not connected. In the end, modest revenue growth is immediately eaten up by inflation and the shortage from year to year is growing, especially since pension payments are increased annually.

This year, in particular, the planned indexation of pensions (approximately 17%) in March and January, we began to repay old debts of ex-military that will pull the “extra” 8 bln.

The pension debts of 50 million, “Ukrpochta” – 500 million, decumulation – 3.6 billion.

In order to ensure payment of pensions, the state has to patch a hole in the PF from other sources. Last year on pensions from the budget allowed to 139.3 billion. But this is only the official deficit PF. In fact, even this funding is not enough Fund further overdrawn 10.7 billion UAH. in December, revealed the amendments to the budget-2018. This amount to the Pension Fund were transferred from other expenditure items.

“In particular, UAH 2 billion. taken from the Fund of subsidies to the farmers and 7.2 billion – from children’s payments. The authorities then explained: that it was possible to save, because the actual birth rate was lower than projected. But even that was not enough and at the end of the year PF is still owed to the state Treasury UAH 4.8 billion. That is, instead of the “official” deficit turned out to 139.3 billion hole in 155 bln.” – calculated the Viktor Skarshevsky.

This year, the Cabinet has laid down these objectives have 167,5 billion, that is, if The own revenues of the Pension Fund will grow by only 8% state funding – more than 20%.

“The deficit is huge. And although we were promised that after the pension reform, it will shrink, practice shows that the hole, on the contrary, only grow”, – says the head of the Ukrainian analytical center Alexander Okhrimenko.

The “extra” 28.2 billion UAH. budget is almost 700 UAH. with every Ukrainian, which, in fact, have to be discharged on pension. Just over 167 billion budget infusion will be used to provide payments of pensions themselves (including their military increase from 1 January, and all the rest – March 2019). Another 500 million UAH. laid “Ukrpochta” – to compensate for the delivery of pensions.

As already mentioned, the money the postal service promised by President Petro Poroshenko after the “Ukrposhta” has threatened to stop the allegedly unprofitable delivery. Although, as the expert said, pensions have never been to “Ukrposhta” big burden, so, most likely, in this case we are talking about trivial preferences the postal service.

As suggested by one expert, that kind of fee for that in the midst of the election campaign “Ukrposhta” is not presented to the authorities an unpleasant surprise and tore off the delivery of money to the electorate.

50 mln. the budget provides for compensation to pensioners that they will be able to sue in the courts.

As mentioned earlier, are now involved in ex-security forces. They are massively judge myself several thousand hryvnia for the wrong accrued pension (excluding the work under special conditions, bonuses, etc.). But, as told by retired interior Ministry Igor Rusk, to get the money out of state is very difficult – citing a lack of money, the authorities put the pensioners in the queue, and where their compensation people waiting since 2012. There will be enough 50 million on all payments.

The budget also laid down 643,2 million UAH. for the payment of pensions to internally displaced persons, which last year appealed for resumption of payments. But payments on old debts (2014) this amount does not take into account, – is spoken in the explanatory note.

Interestingly, in the expert insights recorded the remark of the Ministry of Finance about too much spending on the maintenance of the PF (administrative costs, management costs, etc.). It will go to 1.2% of the total pension budget (without taking into account last year’s balance), and this is neither more nor less – 3, 6 billion UAH.

“This does not meet the recommendations of the Cabinet, signed the decree №710 “On the efficient use of public funds”, in particular, for the PF = 1%”, – says the experts findings. Alexander Okhrimenko says that the experts have long suspected about the large-scale corruption schemes in the PF.

“Intricate administrative costs, there is no registry of pensioners, all of this is the ground for corruption. But a full-fledged audit of the Fund still have not conducted”, – he said.

Where is the money

But the most interesting question is how the government plans to provide funding of the Pension Fund, given that the Treasury is desperately short of money. In fact, the budget money will share several strategic articles and the Pension Fund have to be in the General queue.

“It is clear that the timely payment of pensions, and even in the election cycle for the state a priority. In the extreme case, if money will be missed, will include the printing press,” admits Alex Kush. However, this option is unlikely to approve the IMF. So, most likely, the government will intensively look for additional opportunities to fill the Pension Fund, – says Andrey Zablovsky.

“Now frantically looking for ways to increase revenues, including from taxes” – he said “Country”.

One of the ideas from last year promoting the Ministry – we are talking about ERU with big salaries (currently the maximum amount for the collection of the single social contribution – 55 thousand UAH. beyond it, the tax is not charged).

As told in a recent interview with “Country,” Minister of social policy Andrei Reva, in Ukraine more than 50 thousand people have been paid more than 55 thousand UAH. But ERU they only pay 8%, not 22% as all other Ukrainians. In addition, Andriy Reva announced plans detailing salaries.

“Take the average and small business. 75% of workers receive an official salary 3720 UAH. This vast array of the shadow wage. 84 thousand heads show minimal. And to 4 thousand UAH. gets 20 thousand of Directors only in Kiev. We said OK. But ERU will pay two salaries. You’re still the Director. Co-pay PF to 1 thousand UAH. in a month,” said Reva.

However, the new budget year has begun, and the ambitious plans to find money in the Pension Fund still exist only in the minds of officials. So count on these revenues is seriously not worth it, – experts believe. Moreover, according to Alexei Kusch, in General a sensible idea the Ministry of social policy can negate one caveat – the Agency is lobbying for not only the expansion of the tax base, but increase pensions for those who will pay increased ESV.

“In the end, the rise in the income of PF is unknown, but the costs will definitely increase,” – said Kusch.

Andrew Zablovsky said that the government will attempt to pump up budget revenues by increasing tax receipts. And in this way all methods are good. Thus, according to the “Country” SFS received a secret command to throw all the efforts for the maximum collection of taxes.

Their “pumped up” artificially, for example, deliberately increasing the tax base, i.e., the customs value of goods. Most often on the arbitrariness of customs officers complain about motorists. Custom, allegedly, while making imported cars does not account for the numbers specified in the contract of purchase and sale, and “draws” amount “from the ceiling” – and it is often 1.5-2 times higher than the real value.

Accordingly, sharply grows the cost of customs clearance. The same “tricks” customs officers do with other imported goods.

“It is possible that if this does not work, will review tax rates and redistribute the money to the PF in the manual mode,” says Zablovsky.

This means that disruptions in the schedule of pension payments, such as those that were already in the summer of 2018, are excluded. Moreover, the official figures of the PF deficit 167,5 billion UAH. likely to be underestimated, and the Fund will have to “borrow” from the Treasury to 15-20 bln. predicts Skarshevsky. In his opinion, to seek the missing money power be the same way – transferring funds from other expenditures, including social ones.

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