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Modernization of the Pension System in Ukraine

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Modernization of the Pension System in Ukraine Course code: BE300E Name / Candidate no.: Olha Kuchevska / 6 Modernization of the pension system in Ukraine Date: 19 May 2019 Total number of pages: 88 Abstract Since the 1990s, many countries have faced the problem of aging, which has led to more profound problems associated with the provision of normal retirement benefits; governments have begun reforming their pension systems by creating multi-pillar systems. Ukraine is also on the list of these states; during the last 15 years, there have been many attempts to introduce a three-pillar pension system, but they were unsuccessful. Therefore, there is a need to investigate the problems of the process of modernizing the Ukrainian pension system in terms of the role and influence of actors on the process of developing and implementing pension reforms and how it affects the state of the pension system. The purpose of this study is to identify and investigate how the reform of the pension system affects the state of the pension system. Also, in the course of the study, the content and components of past pension reforms in Ukraine will be revealed, the need and expediency of those changes, and the change in the trajectory and goal of reforms in the development and implementation process; historical institutionalism and discursive institutionalism are theoretical framework for the research, since they explain the role of discourse and ideas in the process of development and evolution of the pension system. The empirical findings are based on data from eight interviews conducted with experts involved in the development of pension reforms as well as on secondary data. Exploring the development of the pension system in Ukraine, I received very interesting results that do not coincide with the theory, but prove its importance. At different levels of formation of ideas, actors are guided by different goals and interests, which leads to ineffective discourse and as a result - reform do not achieve its goal. It was determined, that the main reasons for the reforms were and are: reduction the number of workers and increasing the number of pensioners; reduction of the level of replacement rate of wages by pension payments, which should be not less than 40%, in Ukraine - 28,8%; pension fund deficit. In addition, previously adopted reforms had a short-term effect and were not aimed at solving the problem, because in the process of development, reforms were influenced by the personal interests of decision-makers. Keywords: solidarity pension system, three-pillar system, pension provision, accumulative pension system, replacement rate, deficit, demographic crisis. I Acknowledgements My master program started at Taras Shevchenko University and continued at the Business School of the University of Nordland. It was a great time, I had many opportunities to meet interesting people and learn a lot of interesting and new things. This experience has expanded my horizons and knowledge. I am very grateful to both universities for this opportunity to study from the best professors of Ukraine and Norway. Although work on graduation theses turned out to be difficult but extremely interesting and new for me. I will definitely remember those moments with pleasant emotions and nostalgia. I would like to express my gratitude to Gowindage Chamara Jayanath Kuruppu and Evgenia Nosova for their constructive criticism, assistance and support in the process of writing my master theses, as well as all coordinators and reviewers, for useful comments and helpful tips during draft presentations. I am very grateful to all the respondents that they found the opportunity and time for an interview to share their experiences, as well as valuable and useful information that became the basis for writing this research. My sincere gratitude to the family, who always supported me and encouraged me in difficult moments, and gave valuable advice and guidance. II Content Abstract ............................................................................................................................................... I Acknowledgements............................................................................................................................ II Content ............................................................................................................................................. III List of figures ..................................................................................................................................... V List of tables ...................................................................................................................................... VI Ⅰ. INTRODUCTION .......................................................................................................................... 1 1.1 Relevance and Background of the research ............................................................................... 1 1.2. Statement of the research problem ............................................................................................ 3 1.3. Objectives of the study .............................................................................................................. 4 1.4. Structure of thesis ...................................................................................................................... 4 Ⅱ. LITERATURE REVIEW ............................................................................................................ 6 2.1. Introduction ............................................................................................................................... 6 2.2. Management of pension funds .................................................................................................. 6 2.3. Pension reforms in Developed Economies ................................................................................ 7 2.3.1. Pension reforms in European countries ............................................................................. 7 2.4. Pension reforms in Emerging Economies ................................................................................. 8 2.4.1. Pension reforms in China ................................................................................................... 8 2.4.2. Pension reforms in Latin America ...................................................................................... 9 2.5. The main incentives for pension system reform ....................................................................... 9 2.6. Factors that influence the reforming process .......................................................................... 10 2.7. Main risks and challenges ....................................................................................................... 11 2.8. Components of pension reforms.............................................................................................. 12 SUMMARY OF LITERATURE REVIEW ................................................................................... 14 Ⅲ. THEORETICAL FRAMEWORK........................................................................................... 15 3.1. Introduction ............................................................................................................................. 15 3.2. From Historical institutionalism to Discursive institutionalism.............................................. 16 3.3. Discursive institutionalism ...................................................................................................... 17 3.4. The explanatory power of ideas .............................................................................................. 19 3.5. The explanatory power of discourse ....................................................................................... 20 3.5.1. Communicative and coordination discourse .................................................................... 21 3.6. The limits of Discursive Institutionalism ................................................................................ 22 SUMMARY OF THEORETICAL FRAMEWORK ...................................................................... 23 Ⅳ. METHODOLOGY .................................................................................................................... 25 4.1. The research question development ........................................................................................ 25 4.2. Philosophical position ............................................................................................................. 25 4.3. Research design ....................................................................................................................... 27 4.4. Data collection and analysis .................................................................................................... 29 4.4.1. Primary data ..................................................................................................................... 30 4.4.2. Secondary data analysis ................................................................................................... 34 III 4.5. Validity and Reliability ........................................................................................................... 35 4.6. Ethical background to the study .............................................................................................. 36 SUMMARY OF METHODOLOGY ............................................................................................. 37 Ⅴ. EMPIRICAL
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