The main findings of the audit highlight both structural and operational issues within the Pension Fund of Ukraine (PFU).
Budget deficiencies and reliance on foreign aid:
The PFU is heavily dependent on subsidies from the state budget, which itself is in dire need of international assistance and loans. This dependency renders the PFU financially vulnerable and underscores the necessity for more effective resource allocation.
Discrepancies in financial reporting:
The audit revealed minor discrepancies in reporting with international partners (approximately 0.1% of the reported amounts) and inconsistencies in financial reports between the PFU and the State Treasury, impacting transparency.
Delay in budget approval:
Approval of the PFU budget for 2024 was postponed until October, limiting its operational efficiency for much of the year. The report emphasizes the need for timely budget approvals to ensure proper financial planning and monitoring.
Demographic and economic challenges:
The aging population of Ukraine and the decreasing workforce contributing to the pension system are straining the PFU budget. Pension obligations have increased, while revenue from contributions has declined. Additionally, the PFU has nearly 50 billion UAH in debts from enterprises and 73 billion UAH in arrears to pensioners, often due to delays in fulfilling court rulings regarding payments.
Proposed measures to enhance efficiency and reduce costs:
Over 300,000 displaced pensioners did not undergo mandatory physical identification in 2023, leading to a monthly savings of 1.6 billion UAH. The Audit Office suggests further tightening identification measures, especially for those receiving pensions in temporarily occupied or combat zones.
Reassessment of disability pensions:
The delay in reassessing disabilities during martial law costs the PFU 4 billion UAH annually. Auditors recommend reconsidering whether to continue paying disability pensions to those who may be able to work, which could reduce the number of recipients.
Re-evaluation of geographic benefits:
The audit questions additional pensions granted to residents of mountainous and radiation-contaminated areas, which have remained unchanged for nearly 30 years. The report suggests reviewing the list of relevant areas, and the draft state budget for 2025 may halt a 20% increase in pensions for residents of mountainous regions.
Addressing abuses in the pension system:
The audit uncovered instances of mass registration of pensioners at single addresses in contaminated zones to receive higher payments, costing the state approximately 66.5 billion UAH over two years. Strengthening verification processes and preventing such abuses is deemed necessary.
Contradictory consequences and public reaction:
The recommendations aim to limit pension payments for displaced individuals, disabled pensioners, and those living in specific geographic areas to save state funds amid economic constraints. However, this approach has faced criticism for potentially penalizing vulnerable groups.
Furthermore, the substantial salaries of officials at the Audit Office, despite calls to reduce pension expenditures, have sparked public discontent and raised questions about the prioritization of savings measures at the expense of pensioners' benefits.
It is also noted that the average salary of the leadership of the Audit Office, including all bonuses, exceeds 200,000 UAH per month in 2024.