New Draft Law On Defined Contribution Pension System
The National Securities and Stock Market Commission has completed development of a Draft Law which introduces a second level pension system in Ukraine.
It is expected that after being approved at a sitting of the Cabinet of Ministers, it will be submitted to Parliament as a Government law.
The Draft complements the current solidary pension system with a new, accumulative one, in which every working citizen will make payments to his/her personal pension account.
After reaching retirement age, he/she will be able to receive additional payments from contributions made. Furthermore, in the event of an account holderТs premature death, the money can be inherited in full by his descendants.
The document provides that pension funds will be managed by professional asset management companies, which will be selected on a transparent and competitive basis.
It also stipulates the status of pension fund managers as being independent from the Government.
The law gives the citizen the right to freely choose an authorized non-state pension fund or asset management company where he or she will form his pension savings.
There are also strict requirements for mechanisms of investing money of pension account holders, that are exclusively in diversified and most reliable financial instruments, and also sets out the storing of assets in the most reliable banking institutions. It reportedly provides a variety of safeguards to prevent potential corruption and abuse. The Commission proposes to establish a contribution of 2% of the citizenТs income during the first year of implementation of the defined contribution pension system. Over the next few years, it will increase by 1% annually to a final level of 10%. As noted, a rise in contributions will take place only in the event of growth of average wages in Ukraine of not less than 5% per annum. Thus, the maximum level of deductions (10%) will be established only when the average salary in the country exceeds the current one by 40%. It is reported that the law was prepared with the assistance of the World Bank, EBRD and USAID.
Harmonization of legislation in state market supervision and consumer rights protection
Draft Law No. 10222 On Amendments to Certain Legislative Acts of Ukraine to Increase the Business Competitiveness and Ensure Effective Consumer Rights Protection† registered on 11 April 2019, is intended to improve legislation in state market supervision, consumer rights protection, as well as supervision (control) in the field of economic activity.
As the explanatory note states, this Draft is intended to reduce corruption risks related to the activities of officials during inspections, to step up protection of consumers and other public interests in the event of detection in the market of a non-food product that is hazardous, poses a risk and/or does not meet the established requirements.
This Draft Law is also important in terms of fulfilling obligations undertaken by Ukraine under the Association Agreement between Ukraine and the EU.
The DraftТs main provisions stipulate the following:
Ч not to extend the effect of the Law On Principles of State Control (Supervision) in the Area of Economic Activity to supervision of the state market in view of the differences present between the approaches and organization of supervisory activities;
Ч to specify the list of exclusions from the scope of the Law of Ukraine On State Market Supervision and Control Over Non-Food Products by introducing such product types control (supervision) over which is carried out by other supervisory modes, like objects of construction as defined by the Law of Ukraine On Regulation of City Planning Activity, aircrafts, components and equipment thereof, precious metals, precious stones and wares thereof (jewelry and household stuff);
Ч to ensure the possibility of market supervision by collegial bodies;
Ч to implement Article R33 of the Decision No.768/2008/EC of the European Parliament and of the Council on the establishment of a procedure for economic entities and market supervision bodies in relation to products meeting the requirements of technical regulations but posing a risk;
Ч to unify a variety of inspections related to the characteristics of non-food products (clarification of inspections types instead of three existing ones (external/non-external/combined) so as to avoid abuse of authority;
Ч to establish clear and transparent requirements to officers of market supervision bodies and economic entities in relation to list and terms of submission of documents during an inspection;
Ч to establish a clear deadline for sending a ruling on the imposition of a fine (16 days after the inspection) to the economic entity, which will help to avoid cases of such rulings being set on the imposition of a УbackdatedФ fine;
Ч to establish the possibility for associations of economic entities Ч industry associations to apply for unscheduled inspections by market supervisory bodies;
Ч to establish a clear ban on the checking of products of another type (characteristic), category and/or group that is not subject to a specific inspection, which will help to focus inspection activities and to prevent abuses by the authorities, etc.