Financial stability after retirement and a protected old age are issues that increasingly concern Ukrainians even at a young age. The instability of the solidarity pension system, demographic changes, and economic risks are forcing a rethink of approaches to savings. In these conditions, it is important to understand exactly when to start saving and which instruments can provide additional income in the future.
UNN asked Volodymyr Dubrovskyi, senior economist at the CASE Ukraine Center for Social and Economic Research, and Pavlo Kukhta, economist at the Center for Economic Solutions, what to pay attention to and what mistakes to avoid when forming one's own pension savings.
When to start saving "for old age"
According to the expert, the start of pension savings should not be postponed to a later period of life. After all, relying exclusively on the state solidarity system is risky.
The solidarity system in Ukraine is not sustainable. It is effectively a financial pyramid in a stage of collapse due to demographics
The solidarity pension system is a model in which Ukrainians who are currently officially employed and working support current pensioners. Employees and their employers pay a single social contribution (SSC), which the state immediately redirects to pay money to pensioners.
The expert explained that the number of working citizens is steadily decreasing, while the number of pensioners is growing. This creates a burden on the budget and reduces the state's ability to provide payments at a sufficient level.
The state will most likely provide some minimums, but that is specifically for basic needs
In this regard, Dubrovskyi advised starting to form one's own savings immediately after the start of labor activity, regardless of income level or employment format.
Pavlo Kukhta, an economist at the Center for Economic Solutions, confirmed: it is worth starting to save as soon as any income appears that allows setting aside even minimal amounts. The main reason is the lack of guarantees within the solidarity pension system.
The system that previous generations were used to is gradually losing relevance. And this is not just about Ukraine. To say that you can rely on a state pension or you cannot — one cannot say that abstractly. Something will work, and something will not. And exactly what — is not known in advance
The economist explained: the classic model that guaranteed previous generations financial stability and security in old age — a stable job, a fixed retirement age, and guaranteed payments — no longer corresponds to the modern economy. Changes in the organization of labor, technological development, and demographic factors make this system unstable.
Relying exclusively on a state pension looks like a risky strategy
Pension savings: why it is important to look for alternatives
Volodymyr Dubrovskyi emphasizes that even with official employment and regular contributions to the Pension Fund, this may not be enough for a financially secure old age.
I would recommend everyone who is currently able-bodied to look for alternative sources. Even if they currently have a good official salary
The expert emphasized that over the long period that will pass before today's youth retire, economic conditions may change, so it is worth forming several sources of income now.
In turn, economist Pavlo Kukhta, in a conversation with UNN, expressed the following view on the problem:
"There is no universal solution. It is not so much about choosing one instrument as it is about consciously managing your finances."
Among the alternatives to state pension provision, he named savings and deposits, non-state pension funds and insurance, investments in assets, and one's own business.
The world is changing very quickly. Relying on one system or one instrument is a mistake
According to him, a healthy approach to financial security in old age should be based on a regular review of decisions. A person should evaluate their circumstances, change strategy, and distribute resources among different instruments.
Bank deposits: can they replace a state pension?
One of the most accessible ways to save in Ukraine remains bank deposits. At the same time, Volodymyr Dubrovskyi warned against excessive trust in this instrument.
A deposit is not a bad thing, but you need to diversify
The expert pointed out that banks direct a significant portion of funds to finance public debt, which creates additional risks. It is also worth considering inflation and the possible devaluation of the hryvnia.
When you invest (funds, – ed.) in a hryvnia deposit, the interest rates are higher, but there will be a certain devaluation
Economist Pavlo Kukhta calls deposits a basic instrument that provides liquidity. But it depends on inflation and the stability of the banking system.
Therefore, it is rather a short- and medium-term solution
Real estate investment as a way of financial "backup" for old age
Another common instrument that can help establish financial stability in old age is real estate investment. According to the expert, this direction has long-term potential but is not without risks.
Real estate has a long-term trend toward price increases. But if the population in Ukraine decreases, that may change
Separately, he emphasized the risks associated with the war. After all, according to the economist, even real estate in regions that will never be occupied by the Russian Federation can be damaged or completely destroyed as a result of the enemy's missile and drone strikes.
High-risk alternatives to traditional pensions: do they have a right to exist
Expert Volodymyr Dubrovskyi classifies precious metals, cryptocurrency, and other similar assets as riskier instruments that can become an alternative to state pension provision.
Metals do not produce any value; they just lie there
Regarding cryptocurrencies and other high-risk instruments, Dubrovskyi advises caution, as they require a certain level of experience from the investor and financial and moral readiness for losses.
Those who play professionally win. Those who do not play professionally lose more often
Non-state pension funds and insurance
Dubrovskyi paid special attention to institutional instruments — non-state pension funds and life insurance programs.
They take your money and distribute it into various instruments
Such funds operate under state supervision and adhere to investment restrictions, which reduces risks but simultaneously limits profitability.
As a way of saving money, they are probably more reliable than individual investments
At the same time, Dubrovskyi advised Ukrainians to carefully check the reputation of funds, their history, and ownership structure so as not to encounter outright fraudulent schemes and "financial pyramids."
Pavlo Kukhta, in a conversation with UNN, also emphasized that non-state pension funds and pension insurance can be part of a strategy but require an understanding of the terms and risks.
One should not approach this as a "set it and forget it for 30 years" scheme. You need to constantly understand what is happening with your money
How to provide for yourself in old age: expert advice for Ukrainians
The key recommendation from Volodymyr Dubrovskyi in this case is the competent distribution of funds among various financial instruments.
It is better to diversify investments in different directions
He explained that this allows for reducing the risk of losses in case of negative changes in individual markets.
Separately, he also warns against choosing financial instruments under the influence of advertising.
If (the organizers, – ed.) appeal to your emotions rather than your rationale, then it is very likely a trap
According to Dubrovskyi, it is precisely excessive advertising activity without clear information on financial indicators that can indicate risks for depositors.
The economist also does not advise relying on the material support of children in old age, as many Ukrainians do.
Depending on (relatives, — ed.) in old age is not the best way. Financial independence in older age requires a systematic approach and early planning
Pavlo Kukhta, for his part, advises Ukrainians to do the key thing: take personal responsibility for their financial decisions.
The question is not exactly where to put the money. The question is to think with your head and understand what you are doing with it. This means regular savings, diversification, monitoring investments, and readiness to change the approach depending on the situation
In addition, the expert pointed out that income from one's own business, which does not necessarily have to be large and powerful, can help provide for oneself after retirement. However, this is a complex option that requires involvement and risk, but at the same time provides the opportunity to control the source of income.
Recall
Ukrainians can find out about their insurance record through the PFU portal, the "Diia" app, or at the fund's branches. Currently, to retire at age 60, one must have 30 years of service.