Ruslan Magomedov: The funded pension system should work for the Ukrainian economy

The source of ‘long money’ in the real sector of the economy should be the funded pension system. This was stated by Ruslan Magomedov, Chairman of the National Securities and Stock Market Commission, in an interview with Interfax-Ukraine.

The NSSMC Chairman said that the solidarity pension system cannot withstand the load, and budgetary obligations to pensioners are growing. The transition to the funded model will reduce the unified social contribution (USC) payments and thus reduce the burden on the state budget.

However, the important question is where to invest pension funds? If all the money is invested in domestic government bonds, this will only increase the debt burden on the budget due to the need to pay interest.

‘We need to create additional reliable instruments for investing pension funds that would not compete with the Ministry of Finance’s borrowings. Such instruments could be shares in profitable state-owned companies that pay dividends. One of these companies could be Ukrposhta. And this is how it will start working,’ the Chairman stressed.

Ruslan Magomedov is convinced that without capital markets, we will not ensure the proper restoration of the country’s economy. Therefore, we need to provide portfolio investment instruments that are understandable to European and global investors: ‘If we do everything right, Ukrainian securities can be easily transferred through Euroclear, Clearstream or other depositories to foreign markets. Foreign investors will be able to buy them without opening accounts with us. And our market participants will make money on this, because it is cheaper for a foreigner than opening accounts in Ukraine.’

There is already a link between the NDU and the Polish central depository KDPW. This means that Ukrainian securities can be transferred to Poland.