Hetmantsev on the funded pension system in Ukraine

In autumn 2025, the issue of launching a funded pension system became one of the main topics in discussions about Ukraine’s socio-economic future. Danylo Hetmantsev, head of the parliamentary committee on finance, tax and customs policy, publicly emphasized: delaying the reform any further is no longer an option—otherwise, the country will lose its chance to ensure a decent old age for millions of Ukrainians and, at the same time, miss out on a powerful investment impulse for the economy.

State solidarity model: dead end or social guarantee?
For more than 20 years, Ukraine has built its pension system on the solidarity principle—funds from the working population support current retirees. But demographics leave no illusions: the number of pensioners is growing, the economic base is not expanding, and social guarantees are becoming ever more nominal.
The average pension after the March 2025 indexation is 6,341 UAH, but every third pensioner receives only 3,340 UAH—an amount insufficient to ensure even a basic standard of living.

What is the funded pension system? Hetmantsev’s position
Unlike the “solidarity model,” the funded system (the second pillar) allows working people to save money in a personal individual account, which is invested and remains the private property of the Ukrainian. Contributions are recorded, and what is accumulated over a lifetime forms separate capital (with inheritance rights).
Hetmantsev has repeatedly explained the mechanism:

• 1%+1%+1% model: contributions from employee, employer, and the state;
• automatic enrolment of employees with the right to opt out and regular reminders to join;
• smart symmetry of incentives: with rates of 3%+3%+3%, up to 9% of the salary is accumulated, adding 20–25% “replacement income” to future pensions—together with the solidarity part, that’s over 60% of the average income.

Motivation for reform
Hetmantsev stresses that the funded system is:

• a tool for “returning” part of taxes to the worker;
• a path to forming a domestic resource for infrastructure, investment, and the stock market;
• a key prerequisite for long-term financial stability and citizen participation in managing their futures.

Referring to the experience of Poland, the politician underlines: it was precisely funded pension funds that became the engine of economic growth in the neighboring country. As a result, open pension funds influenced not only pensioners’ living standards but also became a resource for large-scale privatization, securities market development, and the stock market. Poland is now in the club of countries with a GDP of over $1 trillion.

Obstacles and real risks of the reform
The main issue is the lack of clear political will and a weak regulatory base for reliable control over pension funds.
Hetmantsev highlights several stalling factors:

• underdeveloped stock market;
• inertia of parliament and government;
• lack of public trust in government decisions;
• reluctance of some groups to lose “special pension” privileges (35 billion UAH—total payouts to special categories in 2025);
• lack of mechanisms for fair payroll legalization and elimination of pension “loopholes.”

Ukrainian draft law: what does it provide and when might it be implemented?
The draft law on the second pension pillar has been “on pause” for several years. A genuine breakthrough is held back by undeveloped investment infrastructure, resistance from business, and some politicians protecting the “old model.”
The 1%–2%–3% model offers a smooth start for household and business budgets but requires reform in the administration of the SSC (single social contribution) and licensing for pension funds.
If approved, the draft law envisages the launch of automatic enrolment and the formation of a personal funded component starting in 2026 for officially employed contributors.

Arguments of skeptics and economists’ answers
Among the concerns are: the risk of devaluation due to inflation, weak protection of private pension funds, and the negative experience of some countries (Kazakhstan, Hungary) with “reverse” transfers of funds back to the state budget.
Hetmantsev acknowledges the risks but considers that:

• this is a matter of trust and a quality public dialogue;
• fund transparency, competition, and effective state oversight should guarantee long-term success;
• refusal is an agreement to poverty for future generations or the inevitable increase of the retirement age.

Summary and forecasts
This reform is neither simple nor quick, but it will create personal “pension capital,” raise trust in the authorities, protect working Ukrainians from the demographic and economic crisis of old age, and provide an internal investment resource for the country.
Amid war and harsh demographic dynamics, the funded system is a choice between financial survival and stagnation, and delaying the changes could cost far too much both for today’s and for future pensioners.

Author: Ihor Yasko, Managing Partner at WINNER Law Firm, PhD in Law.
If you have questions or issues related to the difficulties of reform implementation, pension law analysis, protection of insured persons’ rights, or advice on participation in the funded system, please contact the lawyers at WINNER Law Firm. Professional legal support will ensure a competent approach, minimize risks, and help you take maximum advantage of the new pension model for a stable future.