Ukraine: Selected Issues

This Selected Issues paper investigates the economic importance of institutions in Ukraine, and attempts to quantify the potential benefits of market-friendly structural reforms. The paper reviews some of the key findings of the development-accounting literature, which has tried to explain the significant differences in income that persist across countries. It introduces the stochastic-frontier approach, outlining its key assumptions and strengths, and results obtained with the stochastic-frontier model. The implications of the results for the specific case of Ukraine are discussed. The paper also analyzes external risks and opportunities for Ukraine.

Abstract

This Selected Issues paper investigates the economic importance of institutions in Ukraine, and attempts to quantify the potential benefits of market-friendly structural reforms. The paper reviews some of the key findings of the development-accounting literature, which has tried to explain the significant differences in income that persist across countries. It introduces the stochastic-frontier approach, outlining its key assumptions and strengths, and results obtained with the stochastic-frontier model. The implications of the results for the specific case of Ukraine are discussed. The paper also analyzes external risks and opportunities for Ukraine.

V. Rebalancing Ukraine’s Public Pension Finances77

A. Introduction and Summary

175. Sharp increases in pensions in 2004-05 have destabilized Ukraine’s public pension finances. Within a 12-month time span, minimum pensions were increased by 155 percent. As a result, staff projects that pension spending in 2005 will be ratcheted up by an estimated 5 percent of GDP, to about 15 percent of GDP, one of the world’s highest spending ratios. To close the resulting financial gap of the Pension Fund of Ukraine (PFU), budgetary transfers are projected to rise to about 5 percent of GDP in 2005, from about only 1½ percent of GDP in 2004.

176. Not restoring the public pension system’s financial viability over the medium term could carry substantial costs:

  • First, the envisaged shift to a modern multi-pillar pension system, legislated in June 2003, would be derailed—the present oversized pay-as-you-go pillar (PAYG) would leave little room to finance the buildup of a funded second pillar. This would mean that Ukraine could not reap the benefits from a multi-pillar pension system, typically viewed as encompassing higher and more secure retirement incomes, increased national savings, higher labor market efficiency, and improved incentives to develop financial markets.

  • Second, the large requirements for budgetary transfers would crowd out other medium-term fiscal spending priorities, such as infrastructure developments and investment in health and education.

  • And third, by severely constraining the authorities’ scope for reducing the already high tax burden on labor, an unreformed pension system could trigger a vicious circle of promoting the shift of labor from the official to shadow economy, labor emigration, and, as a consequence, further increases in pension system’s already very high system dependency (pensioner per contributor) ratio.

177. Restoring financial viability requires a package of measures. The key objective has to be alleviating financing pressures, i.e. reduce budget transfer and contribution rates. Measures will therefore need to lower the high system dependency ratio and, as a complement, reduce the pension replacement rate. The system dependency ratio could be reduced by: (i) raising statutory retirement ages, particularly for women; (ii) pruning the privileged pension regime; (iii) reducing early retirement entitlements; (iv) lengthening the contribution period for eligibility to a full pension; and (v) increasing contributions from the self-employed and agricultural workers. The replacement rate could be reduced by mainly revising the indexation rule.

178. The rest of the chapter is structured as follows. Section B summarizes the financial situation of the pension fund at the beginning of 2004, i.e. after the 2003 pension reform and before the recent pension hikes too place. The key elements of the 2003 pension reform are summarized in an appendix. Section C lays out how the financial situation has changed as a result of the pension hikes, and Section D analyzes the medium-term pension fund outlook without policy measures. Section E considers various adjustment options to bring the pension system back on track.

B. The Public Pension Fund at the Beginning of 2004

179. The financial situation of a PAYG pension system can be summarized by a few key parameters. PAYG arithmetic implies that in every period pension outlays cannot exceed pension contributions unless the financial shortfall is covered by budgetary transfers. This identity is expressed in equation (1), where total outlays (the pension replacement ratio (β) times average wages (W) times number of pensioners (M)) equal contributions (the contribution rate (α) times average wages times the number of contributors (N)) plus budgetary transfers (the share of budgetary transfers (τ) times the replacement rate times wages times number of pensioners). Equation (1) can be rearranged so that the contribution rate is a function of the pension replacement rate, the budgetary transfer rate, and the system dependency ratio (M/N) (equation (2)).

(1)OwnrevenuesαWN+BudgetarytransfersβτWM=PensionoutlaysβWM
(2)α=β(1τ)MN

180. Before 2004, the already low pension replacement rate was trending downward as developments in the other pension parameters increasingly constrained the scope for higher pension payments. With the contribution and budgetary transfer rates as well as the system dependency ratio determined by policy decisions and exogenous factors (such as demographics and labor market trends), the replacement rate becomes the residual variable in equation (2). In Ukraine, due to a rising system dependency ratio, slightly declining actual contributions rate, and lower budgetary transfer rates, the replacement ratio dropped by 2003 to only 32 percent (Figure 1, Table 1). Such a low rate compares unfavorably with other transition and industrial countries (Figure 2) and, as Ukraine’s average wage rates are very low in international comparisons, was not sufficient to keep pensioners out of poverty.78

Figure 1.
Figure 1.

Ukraine: Public Pension Fund Parameters 1/

(In percent)

Citation: IMF Staff Country Reports 2005, 416; 10.5089/9781451839074.002.A005

Sources: Pension Fund of Ukraine; and staff estimates and projections.1/ Number on pensioners to contributors.
Table 1.

Ukraine: Pension System Indicators, 1995-2005

article image
Sources: Anusic and Petrina (2003); PFU (2005); and staff estimates and projections.

Total contribution rate by employer and employee. In October 1998, a differentiated contribution rate for employees rate was introduced (1 or 2 percent), and further widened from February 2000 (1-5 percent).

Pensioners to contributors.

Working age persons to pension age persons.

Average old-age pension to average wage.

Figure 2.
Figure 2.

Gross Replacement Rates in Selected Countries, 2003

(In percent)

Citation: IMF Staff Country Reports 2005, 416; 10.5089/9781451839074.002.A005

Sources: OECD (2003); and staff estimates.

181. A number of factors account for the low replacement rate. Ukraine’s system dependency ratio is exceptionally high, with nearly one contributor supporting one pensioner—significantly above ratios in most other countries. Low statutory retirement ages (Figure 3), at 60 years for men and 55 years for women with full old-age entitlement based on 25 and 20 years of service respectively, combined with unfavorable demographics 79 are one set of factors driving up the dependency ratio. Other features of the pension system also restrain revenues while hiking pension outlays. The system provides for various privileged benefits schemes. Individual replacement rates calculated on the best five years of wage earnings or last two years, provide incentives to minimize contributions in other years. Similarly, the agricultural sector and self-employed tend to underreport their income under the simplified tax regime, creating shortfalls in pension contributions.80 More generally, as the contribution rate had to remain high (Figure 4) to avoid the replacement rate falling even further, many activities in Ukraine stayed in the shadow economy, depriving the pension system of potential contributions.81

Figure 3.
Figure 3.

Statutory Retirement Age for Men in Selected Countries, 2004

Citation: IMF Staff Country Reports 2005, 416; 10.5089/9781451839074.002.A005

Sources: U.S. Social Security Administration (2004).
Figure 4.
Figure 4.

Pension Contribution Rates in Selected Countries, 2004

(In percent)

Citation: IMF Staff Country Reports 2005, 416; 10.5089/9781451839074.002.A005

Sources: U.S. Social Security Administration (2004).

182. The pension reform, legislated in June 2003, aimed to retool Ukraine’s pension system. The adopted pension legislation envisaged to introduce a modern three-pillar pension system.82 The first pillar would be constituted by a revised mandatory PAYG system; the second pillar would be a mandatory, fully-funded scheme, financed by contributions based on a share of the payroll tax; and the third pillar would be a voluntary, fully-funded privately managed pensions scheme.83 The purpose was to shift to a financially more viable system that would (i) provide adequate pensions, including a minimum benefit, (ii) be transparent and establish a direct link between life-time contributions and benefits, and (iii) diversify the sources of financing by combining social security contributions with compulsory and voluntary accumulated savings (see Anusic and Petrina, 2003).84

C. The Public Pension Fund After the Minimum Pension Hikes

183. The deviation of actual minimum pension payments from the legally mandated subsistence level was eliminated with the public pensions hike in 2004. In September 2004, during the run-up to the presidential elections, the government raised minimum pensions from Hrv 130 to the subsistence minimum level of Hrv 284, bringing pension payments in line with the social mandate guaranteed by Article 46 of Ukraine’s Constitution, which states that no pension should be below the subsistence minimum level. In 2005, the government raised the subsistence level further, and minimum pensions in tandem, to Hrv 332.

184. The fiscal costs of the pension hikes have been unprecedented. Staff estimates suggest that the annualized budget cost of the 2004 hike was about 3½ percent of GDP. Together with the 2005 increase, staff estimates that the combined hikes raised pension spending by about 5 percent of GDP to 15 percent of GDP in 2005, one of the highest ratios world-wide (Figure 5).

Figure 5.
Figure 5.

Public Pension Expenditure-to-GDP Ratio in Selected Countries, 2004

(In percent)

Citation: IMF Staff Country Reports 2005, 416; 10.5089/9781451839074.002.A005

Sources: OECD (2004); and Fund staff estimates.1/ Projections for 2005.2/ Data are for 2001.

185. The government took a key countermeasure to avoid an even bigger buildup of fiscal costs. One of the originally adopted pension measures envisaged that for each additional year of service beyond a full service period (20/25 years for women/men), pensions would increase by 1 percent of average wages up to a maximum replacement rate of 75 percent. However, it was decided to apply the 1 percent increase only to the labor pension (up to 1 percent of the minimum subsistence level for each year in excess of the full service period), which reflects a pensioners contribution history and is now for most pensioners significantly lower than the minimum pension, thereby saving about 1½ percent of GDP.

186. The pension hikes have significantly changed the pension system’s parameters and further weakened the social insurance link between contributions and pensions. While the replacement ratio has risen to nearly 50 percent, this is offset by a corresponding increase in budgetary transfers in 2005. At the same time, the minimum pension hikes have even further compressed benefits across pensioners, most of which now receive similar pensions irrespective of their contribution history. In fact, more than 80 percent of pensioner are estimated to receive a pension that in ranges from 75-100 percent of the subsistence level compared to only 15 percent in 2003 (Table 2).

Table 2.

Ukraine: Distribution of Pensioners by Average Pension-to-Minimum Subsistence Level Ratio

(In percent of total) 1/

article image
Source: Annual Reports of the Pension Fund of Ukraine.

2002 data not available.

D. What Would Happen Without Further Policy Changes?

187. The fiscal imbalances generated by the pension hikes will be difficult to reverse in the short term. Rough estimates by staff suggest that without changes to the other pension parameters, the contribution rate would have to be raised by about 15 percentage points in 2006 to allow shifting to full PAYG financing (Table 3). Contribution rates at such elevated levels for the first pillar would make it almost impossible to introduce a multi-pillar system and could have serious adverse labor market effects. Alternatively, the pension fund gap would have to be closed through budgetary transfers of about 4 percent of GDP over the medium term, which would crowd out other fiscal spending priorities.

Table 3.

Ukraine: Pension Parameters, 2000-10

(In percent)

article image
Source: Pension Fund of Ukraine; and staff estimates and projections.

Until 2004, calculated contribution rate based on pension fund revenues, average wages, and number of contributors. 2005 projected rate and from 2006 assumption.

Calculated as budget transfers divided by the product of the replacement ratio, average wages, and number of pensioners.

Number of pensioners to contributors.

Average pension to average wage.

Assumes self-funding of the pension fund and calculates the contribution rate as the residual.

188. The scope for establishing a multi-pillar structure in the short term has been reduced considerably. As the pay-as-you-go pillar has been vastly extended through the pension hikes, the prospects to lower contribution rates and thereby finance the introduction of a fully funded mandatory second pillar are now dim. This setback is particularly costly for a country like Ukraine, where a multi-pillar system could be a key element in a strategy to address adverse future demographic developments and underdeveloped financial markets.

189. Pension financing requirements would severely crowd out other budget spending priorities. A number of medium-term structural reform priorities were spelled out in the Ukraine-EU Action Plan, and the President’s Plan “Ten Steps to Meet the People,” and the Development Policy Loans with the World Bank. Expenditures for those initiatives would have to be downscaled if fiscal maneuver is being limited through pension outlays. For example, to fight corruption and strengthen the court system, wage rises in the civil service were envisaged. Likewise, to increase Ukraine’s human capital, improvements in the education and health sectors are needed. Extending and improving the public infrastructure would be costly, as would be a transition period to introduce targeted social benefits for non-pensioners.85

190. And, the inability to reduce the high labor tax burden would impede the de-shadowing of the economy. The present already high contribution rate, combined with other disincentives to contribute to the pension system, contributes to keeping a large share of activities in the shadow economy, which is still estimated at about 30 percent of GDP. The large labor tax burden also aggravates Ukraine’s demographic situation by providing further incentives for migration. As a result, the already high dependency ratio could rise further, requiring either an even higher contribution rate (assuming unchanged other parameters) or larger budget transfers—both likely unsustainable scenarios.

E. Bringing the Pension Reform Back on Track: Elements of a Package86

191. Putting the pension system back on its track to a multi-pillar system will require policy measures. The preferred option to rebalance the finances of the pension fund and reduce the first pillar of the system would have been a more pronounced reversal or phasing in of the pension hikes. However, since this option was not acceptable for political reasons, other reform options will need to be considered, which would either lower the system dependency ratio or lower the replacement rate. Ultimately, these revisions need to enable the pension fund to also lower the contribution rate so as to break the vicious circle of tax evasion and labor market inefficiencies and finance the transition to a second pillar of the pension system. Since Ukraine has significant growth potential over the medium term, particularly if it addresses its lagging market-enhancing institutions,87 and real wages are bound to rise in line with productivity growth, pensioners would face good prospects of receiving rising benefits once the fundamental weaknesses of the pension system have been corrected.

192. Measures aimed at reducing the system dependency ratio could include:

  • Increase the statutory retirement ages, particularly for women. At 55 years, the retirement age for women in Ukraine is very low in international comparison, in particular in relation to female life expectancy (Figure 6). In the medium-term, also the retirement age for men may have to be reconsidered as the life expectancy is projected to recover from the sharply declined levels of recent years.88 For example, the World Bank estimates that gradually raising the women retirement age to 60 years over ten years would result in annual savings of 1 percent of GDP from 2010 onward (and less than 1 percent of GDP until 2010) (see Anusic and Petrina, 2005).

  • Lengthen the contribution period for eligibility to a full pension. Extending the period of eligibility for a full pension beyond the current 20/25 years for women/men would help to reduce expenditure and simultaneously raise contributions.

  • Reduce early retirement entitlement and privileged pensions. The unfavorable pension parameters do not leave room to allow for generous early retirement entitlements (Table 4) or privileged pensions benefits. Pruning both areas would contribute to limiting pension outlays.

  • Revise the contribution system for the self-employed and agricultural workers. Currently, the incentive structure for self-employed and agricultural workers is to underreport their tax liabilities and consequently also their pension contributions. Linking their contributions directly to their pensionable income could address this distortion. The gradual increase in the contribution rates for agricultural workers, starting from 2005, already aims to address the issue and needs to be enforced.

  • Encourage the growth of the labor force. In addition to the parametric adjustments of the characteristics of the pension system, and the systemic reform that aim at building a second pillar, the public pension system can be strengthened raising the size of the labor force through higher labor force participation and a return of emigrants to Ukraine.

Figure 6.
Figure 6.

Ratio of Female Life Expectancy to Retirement Age in Selected Countries, 2003

Citation: IMF Staff Country Reports 2005, 416; 10.5089/9781451839074.002.A005

Sources: U.S. Social Security Administration (2004).
Table 4.

Ukraine: Number of Pensioners Receiving Early Retirement Benefits 1/

article image
Sources: Pension Fund of Ukraine; and staff estimates and projections.

Projection for 2005.

Measures that would reduce the replacement rate include:

  • Revise indexation rule. While the envisaged link of pensions to at least 20 percent of real wages increases would allow pensioners to participate in the expected large catch-up growth of real wages, such a redistribution is costly. At least in the short-term, the government may want to reconsider the indexation rule and link pension increases exclusively to CPI inflation. Based on 2005 data, the suspension of the 20 percent link could save about ½ percent of GDP.

  • Strengthen the link between benefits and contributions. As a result of the recent pension hikes, the already weak link between pensions and contributions was lost as more than 80 percent of pensioners now receive the minimum pension. Revisions to the indexation rule could be used to reestablish a stronger differentiation of pension benefits by status of pensioner which the accrual rules of the pension reform aim to achieve.

APPENDIX Key Elements of the Pension Reform

Pension legislation was adopted in June 2003 and the new system took effect from January 1, 2004. The system will consist of a mandatory defined-benefit, tax-financed pay-as-you go pillar; a mandatory defined-contribution, fully-funded second pillar; and voluntary fully-funded privately managed third pillar. While revisions to the first and third pillar have entered into force from 2004, the introduction of the second pillar is linked to the following conditions (i) two consecutive years of at least 2 percent real GDP growth per annum, (ii) a balanced budget of the PFU according to international accounting standards, (iii) functioning supervisory systems, and (iv) an increase of the actual minimum pension to the subsistence level.

Even without the recent hikes in pensions, the successful shift to a multi-pillar system was viewed to require a number of further adjustments. In particular, (i) the retirement age is low; (ii) the indexation to real wages is relatively generous and discretion in the indexation makes it intransparent; (iii) privileged pensions are costly; (iv) the trigger mechanism for the introduction of second pillar could delay its implementation and individual choices under second pillar are only envisaged eleven years thereafter; and (v) some institutional weaknesses of the third pillar remain.

The first pillar: Mandatory PAYG

  • The range of pensions has been reduced to three types of pensions: old age, disability, and survivors.

  • The retirement age is unchanged at 55 years for women and 60 years for men.

  • The system has been more clearly related pensions to earnings. It offers a 1 percent accrual rate for those covered by the PAYG system only and 0.8 percent for those covered by the mixed system. Total accrual rates are capped at 75 percent for old-age pension and 85 percent for privileged pensions.

  • Pension increases will become more rules-based compared to the discretionary increases under the old system. Indexation will be linked to CPI changes plus at least 20 percent of real wage growth to let pensioners participate in the labor productivity growth. Nevertheless, discretion remains as the wage indexation includes a range (020 percent) and it has not been defined whether it refers to net or gross wages.

  • Benefits for high-wage earners were raised. The ceilings on income and pensionable wage were increased to seven times average earnings from less than twice average earnings.

  • The pension reform allowed a recalculation of the benefits under the provision that the newly calculated pension benefits cannot fall below the currents ones. The process, conducted between January and August 2005, raised pension expenditure by about 1½ percent of GDP (Anusic and Petrina, 2005).

  • The disability pension was reduced to those from general illness and benefits tied to the projected old-age benefit rather than average wages.

  • The social pension, for those not eligible for an old age pension, was moved to the Social Assistance Fund.

The second pillar: Mandatory contributions scheme

  • Participants will be those below the ages of 40 (men) and 35 (women). Men between 40 and 50 and women between 35 and 45 can choose to stay in the old PAYG or to enroll in the multi-pillar system.

  • The maximum contribution rate is capped at 7 percent.

  • The second pillar will be organized as a state accumulation fund which chooses asset management companies to manage the funds which will earn an aggregate rate of return. An option to individually choose the asset manager and obtain an individual rate of return will be provided to participants eleven years after the launch of the second pillar.

  • Legislation provides strict requirements for asset managers and investment limits.89

  • The mandatory pension funds will be supervised by the Non-bank Financial Supervisor which was established in late 2002.

The third pillar: A private pension scheme

  • Participation in the third pillar of non-state pension fund is voluntary and unrestricted.

  • Voluntary pension funds can be set up as open, corporate or occupational by a sponsor, interest group or fund management group.

  • Legislation provides requirements for asset managers and investment limits.90

  • The mandatory pension funds will be supervised by the Non-Bank Financial Supervisor which was established in late 2002.

References

  • Anusic, Zoran and Katerina Petrina, 2005, Pension Reform in Ukraine. Remedies to Recent Fiscal and Structural Challenges, World Bank, February 2005 (mimeo).

    • Search Google Scholar
    • Export Citation
  • Anusic, Zoran and Katerina Petrina, 2003, CEM Pension Note: Reforming Ukrainian Pension System, World Bank, (mimeo).

  • Castello-Branco, Marta, 1998, “Pension Reform in the Baltics, Russia, and other Countries of the Former Soviet Union,IMF Working Paper 98/11 (International Monetary Fund: Washington).

    • Search Google Scholar
    • Export Citation
  • Flanagan, Mark, 2005, “Ukraine: Medium-Term Fiscal Priorities,” in: Ukraine: Selected Issues, IMF Country Report No. 05/20, pp. 4759, (International Monetary Fund: Washington).

    • Search Google Scholar
    • Export Citation
  • Lindeman, David, Rutkowski, Michal, and Oleksiy Sluchynskyy, 2000, The Evolution of Pensions System in Eastern Europe and Central Asia. Opportunities, Constraints, Dilemmas and Emerging Best Practices (World Bank: Washington).

    • Search Google Scholar
    • Export Citation
  • Ministry of Labor and Social Policy of Ukraine. Pension Fund of Ukraine, 2005, Mandatory State Social Insurance and Pensions in 2004. Figures and Facts (Kyiv).

    • Search Google Scholar
    • Export Citation
  • Organization for Economic Co-operation and Development, 2005, Pensions at a Glance. Public Policies Across OECD Countries (Paris).

  • Organization for Economic Co-operation and Development, 2003, Reforming Public Pensions. Sharing the Experiences of Transition and OECD Countries (Paris).

    • Search Google Scholar
    • Export Citation
  • Pension Reform Working Group, 2003, Model. Financial Provision of Compulsory State Pension Insurance System, Kyiv (mimeo).

  • Schiff, Jerald, Niko Hobdari, Axel Schimmelpfennig, and Roam Zytek, 2000, Pension Reform in the Baltics. Issues and Prospects, IMF Occasional Paper 200 (International Monetary Fund: Washington).

    • Search Google Scholar
    • Export Citation
  • U.S. Social Security Administration, 2004, Social Programs Throughout the World.

  • Wiener, Mitchell, 2000, Pension Reform, International Centre for Policy Studies, Policy Study No. 12 (Kyiv).

  • World Bank, 2005, The Development of Non-Bank Financial Institutions in Ukraine: Policy Reform Strategy and Action Plan (mimeo).

  • World Bank, 1994, Averting the Old Age Crisis: Policies to Protect the Old and Promote Growth (Oxford: Oxford University Press)

77

Prepared by Andrea Schaechter.

78

The World Bank found that headcount poverty among pensioners in 2001 was substantial at 30 percent (defined as 75 percent of equivalent adult expenditure in 1999 adjusted for inflation) but virtually identical to the poverty rate among non-pensioners (Anusic and Petrina, 2003).

79

Ukraine’s population shrank by 4 million since 1991 (a combination of low birth rates, falling male life expectancy, and migration). The pension fund estimates the ratio of pension age population to working age population to rise from just below 0.4 to 0.8 by 2050 (Pension Fund of Ukraine, 2005).

80

The self-employed pay 42 percent of their tax liabilities to the pension fund. Until 2005, the agricultural sector was under the same regime but is now officially required to contribute one fifth of the universal contribution rate which will be increased annually by 20 percent until the full contribution rate is reached.

81

Without reforms, the Pension Reform Working Group (2003) estimated that the replacement rate would drop to 22 percent by 2040. Wiener (2002) reports a similar estimate of 25 percent by 2050.

82

In July 2003, parliament adopted the Mandatory State Pension Insurance Law and the Law on Non-Government Pension Provisioning.

83

Revisions to the first and third pillars took effect January 1, 2004, while the second pillar is scheduled to be launched conditional on a serious of factors. See the appendix for a brief summary of the reform’s key elements.

84

The advantages of a multi-pillar pension system are seen as reducing labor market distortions by establishing a close link between individual contributions and benefits, increasing a country’s savings and investment path, and accelerating the development of financial markets and improve the efficiency of capital allocation (see, for example World Bank 1994 for a discussion of the rationale of a multi-pillar system, and Lindeman, Rutkowski, and Sluchynskyy 2000, OECD 2003, Schiff and others 2000, and Castello-Branco 1998 for a discussion of pension reforms in transition economies).

85

For an account of medium-term fiscal-structural challenges and their costs (which are estimated at about 6 percent of GDP), see Flanagan (2005).

86

See Anusic and Petrina (2005) for an discussion of reform options.

87

See Chapter I.

88

Working beyond the statutory retirement age increases eventual pension payouts. However, it seems these incentives are not very effective in raising effective retirement ages.

89

The World Bank views the requirements as appropriate except for the high investment limit (50 percent) on bank deposits and banks’ savings certificates.

90

The World Bank views the relatively low minimum capital requirements and some of the investment limits, which allow large exposure to bank deposits and money market instruments but restrict investment in Ukrainian government securities, as problematic.

Ukraine: Selected Issues
Author: International Monetary Fund
  • View in gallery

    Ukraine: Public Pension Fund Parameters 1/

    (In percent)

  • View in gallery

    Gross Replacement Rates in Selected Countries, 2003

    (In percent)

  • View in gallery

    Statutory Retirement Age for Men in Selected Countries, 2004

  • View in gallery

    Pension Contribution Rates in Selected Countries, 2004

    (In percent)

  • View in gallery

    Public Pension Expenditure-to-GDP Ratio in Selected Countries, 2004

    (In percent)

  • View in gallery

    Ratio of Female Life Expectancy to Retirement Age in Selected Countries, 2003