V. A. Lipkan: Administrative and Legal regulation of the activity of non-governmental pension funds in Ukraine

Lipkan V.

Administrative and legal regulation of the activity of non-governmental pension funds in Ukraine: [monograph] / A. Kaftia, V. Lipkan, N. Balaniuk / Edited by Dr. V. Lipkan. — К. : О. S. Lipkan, 2015. — 316 p.

ISBN 978-966-2439-50-2

 

The thesis work is devoted to the study of peculiarities of the administrative-legal guaranteeing the activity of non-governmental pension funds in Ukraine. The study highlights the concept of administrative and legal mechanism of non-state pension system. The peculiarities of formation of non-state pension funds and their legal essence are specified. The specific character of implementation of state control and supervision of functioning of non-state pension funds is discovered. On the basis of the analysis of the largest non-state pension funds activity іn Ukraine directions of development and improvement of the elements of the mechanism of administrative and legal regulation of non-state pension system activity are singled out. The structure and current pension system state of Ukraine are analyzed, elaboration is presented, that is aimed at identifying ways of its gradual reorganization from a three-level into a two-level system with the subsequent advantage of individual savings accounts opened in the non-state pension funds.

INTRODUCTION

 

Carrying out of the pension reform in Ukraine foresees introduction of savings and not nationalized pension funds (hereinafter – NPF) simultaneously with the united system of the capitalized (funded) pension funds. In contrast to the Pension Fund of Ukraine, contributions to which are defined for the payment of the current pensions, revenues to the NPF are accumulated and invested.  Terms of its establishment and operation, supervision and control over activity, the impact of investing and therefore the volume of individual pension savings in the funds depend directly from the competent and balanced mechanism of administrative and legal regulation of the NPF activity.

A number of laws and regulations on the activity of the NPF, including the Law of Ukraine “On private provision of pension” and the Law of Ukraine “On measures of the legislative ensuring of the reform of the pension system” were recently adopted. However, the process of creation and development of the NPF in Ukraine is progressing rather slowly due to lack of experience and system research, works and implementation of effective regulatory and incentive measures that are very popular currently, but quite complicated. The urgency of development by the state of the reasonable policy on formation of the mechanisms of voluntary pension insurance, increasing of the state control and regulation of such funds is also caused by the negative results of the activity of the trusts and the NPF in the 90’s of last century, that is one of the essential factors of population distrust to any financial institutions.

At the same time the favorable economic environment for the development of the NPF in Ukraine is not formed. Main problems of establishment are associated with low level of macroeconomic stability of the state, unsatisfactory indicators of the effectiveness of activity of enterprises, the capitalization of financial market and incomes of population. Thus, the number of factors which stimulates the development of the NPF and more effective use of the inherent potential exist.

Scientific research of the preconditions of establishment of new system of the NPF, prospects for activation of activity, creation of more favorable conditions for the growth and capabilities of state and corporate regulation acquire relevance in connection with the defined by the Government strategy concerning the formation of the middle class in the state, as the dynamics of deposits of the population in the NPF direction depends on the strengthening of this social stratum.

Analysis of current scientific sources on topical issues of the problem allows concluding that they are at the beginning of the way. Therefore, research of these aspects has theoretical and practical importance.

The problems of social policy and reforming of the pension system and provision of pension are studied by domestic and foreign scholars. Theoretical and methodological bases of creation of not nationalized provision of pension are reflected in scientific works of famous domestic scholars, such as V. V. Basov, A. O. Bakhmach, V. M. Butuzov, Y. V. Vitka, L. K. Voronova, V. V. Gordienko, B. O. Zaychuk, M. V. Lazebna, E. M. Libanova, O. G. Morozov, A. A. Nechay, A. Z. Ostapovych, M. M. Papiev.

The problems of research of development and functioning of the NPF for the last 20 years were studied by foreign financiers: M. Winner, R. Vona, D. Snelbeker, E. Rolker and domestic scientists in the field of financial law and economic activity, scientists-lawyers: V. B . Averyanov, O. F. Andriyko, A. I. Berlach, Y. V. Vitka, I. P. Holosnichenko, N. M. Kovaleva, R. A. Kalyuzhnyy, M. P. Kucheryavenko, D. M. Lukyanets, A. A. Nechay, O. A Novikov, O. V. Mykhailov, V. I. Mudrakov, N. R. Nyzhnyk, M. B. Rippa, L. A. Savchenko, O. V. Soldatenko, A. Y. Tkach, V. O. Yatsenko.

In Ukraine functioning of the NPF within the state control and supervision for the first time was comprehensively studied in the work of I. O. Tkalich “Legal regulation of activity of private pension funds in the system of not nationalized provision of pension in Ukraine” (specialty 12.00.07 – administrative law and process, financial law, information law).

The effectiveness of reforming of the pension systems in the accumulation fund was studied by I. Y. Goryunov, A. E. Yefremov, T. V. Conoryeva, E. G. Krylov, V. I. Mudrakov, L. O. Setchenkova, I. I. Sokolov, and N. V. Orlov.

By carrying out an analysis of scientific sources, the authors concluded that the theoretical and practical aspects of the NPF activity still remain at the stage of development, so, usually, the majority of scientists focus their attention at the study of theoretical issues of terminology, the history of origin and establishment of private pension funds, assessing their advantages in comparison with the public pension systems. However, to the problems of the role and importance of administrative and legal influence on the process of formation and development of the NPF in the system of not nationalized provision of pension in the legal literature is paid insufficient attention. However, the state has the right to set “principles and rules” of the provision of pension.

Despite the presence of a significant amount of the scientific researches on various aspects of the NPF activity, comprehensive study of administrative and legal ensuring of these organizations activity is not done.

Therefore follows the actual problem of proper administrative and legal ensuring of the functioning of the NPF in Ukraine.

Aim of the work: at the basis of the achievements of legal science, synthesis of the enforcement activity, analysis of domestic and foreign legislation to carry out comprehensive analysis of the scientific and legal sources for defining of the essence of administrative and legal regulation of the NPF activity in the system of not nationalized provision of pension and on this basis to develop the proposals for improving of the system of the NPF activity and reform of the mechanism of administrative and legal impact on the NPF activity.

Achievement of this goal foresees solving of the following tasks:

-     to analyze the status of scientific developments of the problem in the aspects of administrative and legal ensuring, management and organization of the NPF activity;

-     to explore the historical experience of the NPF creation and legal methods ensuring of their activity in domestic and international practice, to analyze the development of the legal basis of not nationalized provision of pension in Ukraine;

-     to identify the elements of the mechanism of not nationalized provision of pension and to offer authors’ definition of the “mechanism of administrative and legal regulation of private pension funds”;

-     to prove the role of the state and non-government organizations in the regulation of the NPF activity (including analysis of the status, structure and functions of the public bodies that have an influence on the not nationalized provision of pension);

-     to provide the theoretical foundation of functional responsibilities of the bodies of the state supervision and control over the activity of the subjects of the system of the not nationalized provision of pension;

-     to analyze the occurrence of administrative and legal liability in the form of the system of sanctions that can be applied by the bodies of state supervision and control to the subjects of the NPF, thereby to formulate proposals concerning parts of the Law of Ukraine “On financial services and the state regulation of the markets of the financial services”;

-     to develop practical recommendations concerning direction of reforming of the national system of the not nationalized provision of pension, simultaneously  identifying major disadvantages that make the NPF financially unattractive;

-     to form conceptual approaches on improving of the effective mechanisms of the state regulation of the functioning and development of the system of not nationalized provision of pension in Ukraine.

Object of research – public relations arising in the sphere of the NPF activity in Ukraine.

Subject of the study – administrative and legal bases of functioning of the NPF in Ukraine.

The methodological basis of the study consists of the theoretical provisions and methods of scientific knowledge of interrelated and interdependent processes of the NPF development, identifying of their role in the system of administrative and legal relations.

Methodological basis of research includes following scientific methods: dialectical, historical and legal, comparative and legal, system-structural.

Thus, the dialectical method was used for analyze of the NPF as the object of administrative and legal impact. Additionally, by use of the dialectical method characteristic of the field of the not nationalized provision of pension and administrative and legal basis of the creation and operation of private pension funds in Ukraine was performed.

Historical and legal and comparative and legal methods made it possible to track the major trends in development of the NPF, including: the legal basis of the not nationalized provision of pension in Ukraine, the NPF in system of the not nationalized provision of pension of citizens, the concept and types of the NPF.

Methods of the scientific research – synthesis and system analysis were used to characterize the elements of the mechanism of the not nationalized provision of pension, organization of the state supervision and control over the activity of the NPF. Use of statistical method made ​​it possible to define the largest NPF of Ukraine.  Rating to the level of the NPF depositors’ protection was given by use of comparative and legal method.

In the work were also used some general scientific methods: with the help of logical-semantic method was developed and defined the content of the notions “mechanism of administrative and legal regulation of activity of the private pension funds”, “pension plan (scheme)”.

Empirical and regulation research is formed by the legislative and departmental regulations: Constitution of Ukraine, laws of Ukraine, acts of the President of Ukraine, the Cabinet of Ministers of Ukraine, central executive authorities, regulations of international importance; statistics on the activity of the NPF in Ukraine; expert assessment of the development and status of the market of services of the not nationalized provision of pension, domestic and foreign scientific literature, publications in the periodicals, materials of international and scientific conferences, reference literature, as well as expertise rating and data of the state statistics.

 

CONCLUSIONS

Summarizing note that in the monographic study the theoretical synthesis of research work is shown, and new scientifically grounded results that collectively solve specific scientific task on development and refining of the definitions, provisions and proposals which are aimed at the creation and implementation of the system of measures to improve administrative and legal ensuring of the functioning of the not nationalized provision of pension are achieved.

Research of the specificity of the administrative and legal regulation of the private pension funds’ activity in the system of not nationalized provision of pension in Ukraine helped to propose the new solution of the defined scientific problems and to make the following conclusions.

Carried out analysis of means of the state influence and stimulation of the system of the not nationalized provision of pension in different countries of the world gave an opportunity to understand the fact of adaptation of these state mechanisms of influence to certain environmental conditions, that is, as a rule, these measures are based on thorough legislation and properly structured. They include: first, the work  on development of the legislative base concerning ensuring of the functioning of the private pension funds, secondly, adjustment and regulation of the interconnected components of the mechanism of the system: the correlation of liabilities of the pension funds and assets, directions and financial abilities of the division of the  reserves, defining places for functioning of the mediators of the pension funds, licensing terms of the companies with asset management; administration of the NPF;  thirdly, establishment of the features of recognition of the NPF as a bankrupt and the mechanism of protection of participants and contributors of the pension funds with parallel implementation of the policy concerning rules of investment of the NPFs’ funds in financial instruments that would minimize risk and guarantee the incomes of such funds.

The study of world experience of the mechanisms of administrative and legal support of the NPF’s activity helps to define that obligation of participation in the funded pension system, most likely, is dictated by more stringent criteria of the state control in many countries. It is explained by the presence of similar features of the researched object, namely: underdevelopment of the stock market, corporate culture, competitive environment, which includes Ukraine.

Therefore, taking into account the inadequacy of the financial market of the state, due to the lack of appropriate financial instruments, lack of experience of the functioning of the accumulative pension fund, the NPF’s development in Ukraine requires improvement of the separate legal field of the functioning of the system of the not nationalized provision of pension with simultaneous construction of administrative and legal mechanisms of state support.

It was proved that one of the factors of the successful functioning of the NPF in the continental and Anglo-Saxon law is developed network of professional communities of actuaries and auditors. In our country the rights and obligations of independent bodies in the sphere of the not nationalized provision of pension, including: to specialized depository, auditor, actuary is paid a little attention on the legislative level. In connection with this it is proposed to extend the rights of the independent and supervisory authority on the legislative level, accordingly to amend part 5 of Section I of the Law “On the not nationalized provision of pension”, namely:

-     to change the name of art. 5 of Section I of the Law “On the not nationalized provision of pension” from “Audits in the not nationalized provision of pension” to “External control”;

-     to add to art. 5 of Section I of the Law “On the not nationalized provision of pension” p. 4 with the text: “Specialized Depository. Daily supervises fulfillment of the rules of funds’ placement of the pension reserves and requirements as to investing of the funds of the pension savings. About identified deficiencies specialized depositary is obliged to notify the National commission that carries out the state regulation in the sphere of the markets of financial services and the relevant management company of the fund. The depositary is the custodian of securities’ certificates and maintain records and transition of the rights on securities in which are disposed the funds of the pension reserves and the investment funds of pension savings”;

-     to add to art. 5 of Section I of the Law “On the not nationalized provision of pension” p. 5 with the text: “An independent actuary. Annual conclusion of the actuary consists of the results of the actuarial evaluation of the fund obligations before the depositors, participants and insured persons, as well as the results of the evaluation of actuarial value of the funds of the pension reserve and retirement savings”.

It was given author’s own narrow and expanded definition of “pension plan (scheme)”. In a narrow sense: Pension plan (scheme) – it is conditions and procedure of the not nationalized provision of pension of the participants established by the Charter and Rules of the NPF. In a wider sense: Pension plan (scheme) – it is the description, size, order and frequency of pension payments as well as the rights and obligations of the depositor of the fund and the procedure and terms of payment of pension contributions set for members of the private pension fund.

It is necessary to include the pension scheme to the additions to the statute of the NPF as an integral component, as the increasing of the number of participants is proportional to the number of pension schemes which are used in the activity of the NPF. It will grant an opportunity for wider choice of mechanism of payment of the pension contributions, taking into account the opportunities and investor’s needs.

The most suitable variant of participation of an employer and a contributor in the pension scheme for our country was found based on the theoretical and practical studies found – solidarity, when participation in the pension scheme will provide a common responsibility of the employer and employee in the part formation of future pensions of citizens.

For the first time the definition of “mechanism of administrative and legal regulation activity of not nationalized provision of pension” was provided “Mechanism of administrative and legal regulation activity of not nationalized provision of pension” – it is a coherent complex of administrative and legal measures which are aimed at regulation of relations in the sphere of not nationalized provision of pension and protection and satisfaction of the interests of natural persons and legal entities-depositors by the subjects of the public administration – the legislative body (the Verchovna Rada of Ukraine), the state bodies of control and supervision.

It was found out that the system of measures on improvement of the administrative and legal ensuring of relations in the sphere of not nationalized provision of pension should be complex and to include not only legal measures, but also measures of economic, informational, organizational direction.

In order to strengthen the counteraction of the formation of new factors which precede the emergence of illegal relations in the sphere of not nationalized provision of pension the current administrative-legal regime of management and regulation of activity in the not nationalized provision of pension should be reviewed – so to introduce gradual modernization of the model and functions of the state regulators to avoid overlapping of the functions of various state bodies with further formation of an effective system of the state and corporate control over the NPF.

With the aim to correct this situation  it was proposed to create the specially authorized supervisory body – The Inspection of the NPF with simultaneous accountable inspections of the territorial subdivisions without getting of the status of a legal entity and implementation of the obligation to make regular (scheduled) field checks (such as routine tax inspections). To provide functional responsibilities of the established body by p. 12 art. 20, of Law “On not nationalized provision of pension”.

In order to identify trends of positive experience and deterrent negative factors in the NPFs’ activity it is appropriate to use the positive international experience and to create the Expert Council under the Inspection of the NPF at the state level, so legislatively stipulate establishment of this body, which has to be obliged to take a part in development, reviewing of preliminary drafts of legislative, regulatory and guidance documents on private pensions of the not nationalized provision of pension in order to ensure qualified training, taking into account the views the National commission, that carries out the state regulation in the sphere of the markets of financial services, the National securities and stock market commission. The rights and duties of the newly formed body should be provided by p. 13 art. 20 of the Law “On not nationalized provision of pension”.

State control and supervision in the sphere of the not nationalized provision of pension is aimed at protection of the interests of depositors, and thus creation of a transparent financial system. The attention is paid to expansion of powers of the National commission that carries out the state regulation in the sphere of the markets of financial services to impose sanctions on the PPF, AMC, administrators, and custodian banks – offenders of legislation in the sphere of not nationalized provision of pension. In this connection it was proposed to make amendments to part. 1, Art. 40 of the Law “On financial services and state regulation of markets financial services”; to specify the legislative norm in the part of incurring of the administrative and legal sanctions by an official in the sphere of not nationalized provision of pension, namely to complement p. 1, art. 40 of the Law “On financial services and state regulation of markets financial services” by the subparagraph 10 on the application of the administrative sanctions for officials in the sphere of not nationalized provision of pension with next text: “National commission that carries out the state regulation in the sphere of the markets of financial services has the right to issue a decree for the NPF on dismissal of the person in the acts of which the offense is not established, but is a violation of law, dismiss or deny the use the right to vote in solving any corporate, financial issues of the institution for up to 365 days”.

Were offer to expand the rights of potential participants of the not nationalized provision of pension in the sphere of rising of the level of awareness about the mechanism of functioning of the NPF and access to personal information which is stored in the system at legislative level. It was proposed to make amendments to the Law of Ukraine “On not nationalized provision of pension” concerning providing of information to the participant of the fund and to foresee free of charge providing of actuarial data in the form of statements from an individual retirement account. It is necessary to oblige the administrator to expand the scope of reporting information in accordance with the legislation. To review the possibility to publish information on the decision of the founders in the official publication of the list of issues identified National commission that carries out the state regulation in the sphere of the markets of financial services.

BRIEF CONTENTS

 

BRIEF CONTENTS

PREFACE

ACRONYMS

INTRODUCTION

PART 1. NOT NATIONALIZED PENSION FUNDS AS THE OBJECT OF THE ADMINISTRATIVE AND LEGAL INFLUENCE

1.1 Legal basis of the not nationalized provision of pension  in Ukraine

1.2 Private pension funds in the system of not nationalized provision of pension of citizens

1.3 Notion and kinds of the private pension funds.

PART 2THE MECHANIZM OF THE ADMINISTRATIVE AND LEGAL REGULATION OF ACTIVITY OF THE PRIVATE PENSION FUNDS.

2.1 Notion and structure of the mechanism of the administrative and legal regulation of activity of the private pension funds.

2.2 Administrative and legal basis of the creation and functioning of the private pension funds.

2.3 Supervision and control in the sphere of activity of the private pension funds.

PART 3IMPROVEMENT OF THE ADMINISTRATIVE AND LEGAL REGULATION OF THE ACTIVITY OF THE PRIVATE PENSION FUNDS

3.1 Directions of the reform of the national system of the system of the not state provision of pension.

3.2 Directions of improvement of the administrative and legal ensuring of the functioning of private pension funds in Ukraine.

CONCLUSIONS.

ADDITIONS.

USED LITERATURE

THESAURUS

USEFUL BIBLIOGRAPHY ON RESEARCH

WORDS OF GRATITUDE

 


CONTENTS

BRIEF CONTENTS

СONTENTS

PREFACE

ACRONYMS

INTRODUCTION

PART 1. NOT NATIONALIZED PENSION FUNDS AS THE OBJECT OF THE ADMINISTRATIVE AND LEGAL INFLUENCE

1.1 Legal basis of the not nationalized provision of pension  in Ukraine

Provision of pension as the object of administrative and legal regulation.

History of the legal regulation of the activity on not nationalized provision of pension

Current status of legal regulation of activity on not nationalized provision of pension.

Foreign experience of the functioning of the provision of pension

1.2 Private pension funds in the system of not nationalized provision of pension of citizens

Peculiarities of activity of the private pension funds.

Subjects of the private pension funds.

The scheme of the private pension funds functioning.

Limitation of the invest activity with the pension actives.

Kinds of the pension schemes.

1.3 Notion and kinds of the private pension funds.

Historical approaches to forming of the pension system in Ukraine.

Models of the private pension systems.

Kinds of the private pension funds in Ukraine.

Models of the additional provision of pension.

 

 

PART 2THE MECHANIZM OF THE ADMINISTRATIVE AND LEGAL REGULATION OF ACTIVITY OF THE PRIVATE PENSION FUNDS.

2.1 Notion and structure of the mechanism of the administrative and legal regulation of activity of the private pension funds.

Notion of the mechanism of the administrative and legal regulation of activity of the private pension funds.

Composition of the mechanism of the legal ensuring of the activity of the private state funds.

Legitimatization of the activity of the private pension funds in the mechanism of the administrative and legal regulation.

State supervision and control in the sphere of not state provision of pension.

2.2 Administrative and legal basis of the creation and functioning of the private pension funds.

Organizational and legal forms of the private pension funds.

State registration of the private pension funds.

Registration of the private pension funds by the National commission that carries out the state regulation in the sphere of the markets of financial services.

Licensing of the activity of the private pension funds.

2.3 Supervision and control in the sphere of activity of the private pension funds.

Notion of the supervision and control in the sphere of activity of the private pension funds.

System of the state supervision and control over the private pension funds.

Control and supervision authorities of the National commission, that carries out the state regulation in the sphere of the markets of financial services.

Control and supervision authorities of the National securities and stock market commission.

Control and supervision authorities of the national bank of Ukraine.

Control and supervision authorities of the Anti-monopoly Committee of Ukraine.

PART 3IMPROVEMENT OF THE ADMINISTRATIVE AND LEGAL REGULATION OF THE ACTIVITY OF THE PRIVATE PENSION FUNDS

3.1 Directions of the reform of the national system of the system of the not state provision of pension.

Long-term of the pension investments.

Improvement of the tax legislation concerning the operations with the pension actives.

Extension of the trust to the private pension funds.

Contradiction to the shade pension schemes.

3.2 Directions of improvement of the administrative and legal ensuring of the functioning of private pension funds in Ukraine.

Improvement of the control and supervision activity over the private pension funds.

Improvement of the legal status of the private pension funds in the sphere of corporative management.

Widening of the rights of potential participants of the not state provision of pension in the sphere of extension of the level of the erudition in the mechanism of private pension funds functioning.

CONCLUSIONS.

ADDITIONS.

USED LITERATURE

THESAURUS

USEFUL BIBLIOGRAPHY ON RESEARCH

Useful bibliography on the topic.

Administrative and legal regulation.

The provision of pension.

The not state provision of pension.

WORDS OF GRATITUDE