Ukraine : reforming the pension system
Kane, Cheikh T.
This paper provides a detailed discussion of all the programs comprising the Ukrainian pension system. It highlights the redundancies of the system as well as some of its regressive features. Efficiency issues are also addressed through a cross-country comparison of marginal effective taxes on labor. On average these taxes are higher in Ukraine than in OECD countries. A simulation model and a cross-country comparison of implicit pension debt are used to highlight the pension system's structural fiscal imbalance. In order to maintain a viable pay-as-you-go system, a comprehensive reform that includes an increase in the pension age to 65 would be necessary. The report also shows that provided the promises of the public pension system are scaled back, Ukraine could meet the challenge of stabilization, reduce labor taxation, and introduce a multipillar pension system with a fully-funded component.
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