LIBERTARIAN AND SOCIAL INSURANCE IN UKRAINE

Keywords: libertarianism, solidarity pension system, accumulative pension system, unemployment insurance, accident insurance, temporary incapacity insurance

Abstract

Discussions about the reform of the domestic social insurance system, in particular its pension component, are not one year old. However, they have recently become particularly intensive. Recipes for the reform depend on the degree of radical views of advisers. One of the most radical points of view is based on the so-called libertarian approach, whose supporters seek to maximize freedom in all spheres of human existence. Libertarianism in the field of social insurance is based on three theses, namely: the solidarity component of the pension system must be dismantled; the pension system should be 100 % accumulative; insurance against accidents, temporary incapacity, unemployment should be voluntary.

The article substantiates that the solidarity component of the pension system should not be eliminated, as libertarians believe, but modernized taking into account present and future national realities. First and foremost, a decisive departure from the pension insurance system from manual pension management is required by further introducing a three-pronged insurance principle: solidarity, payability, and equivalence of reimbursement. The size of the future employee’s pension must be determined by one single indicator – the amount of cash intended for the employee (on behalf of the employee) to the pension system throughout his working life. From another indicator – insurance experience – should be abandoned from the rudiment of the computer era. The size of the pensions of employees who started their occupation from 2000 must be determined solely by the size of the single social contribution paid from their earnings.

It is proved that the hopes that libertarianism puts on the accumulation pension system also looks very doubtful as a result of the following factors: the general macroeconomic situation, the state stock market and the lack of a source of cash flow. In general, for the current economic conditions, the introduction of a funded pension system is premature.

Finally, libertarians believe that the size and content of the social package in insurance against accidents, temporary incapacity, unemployment should be regulated by the market, and not by the state, as the market redistribution of resources is always much more effective. For this purpose, the specified types of insurance should be through non-state insurance companies. However, the vast majority of employers, with the exception of those who integrate with a particular business group, will not voluntarily insure workers. The undeniable proof of this is the state of affairs with non-state pension insurance. Consequently, the libertarian’s ideas about the replacement of the solidarity pension system with the accumulation and voluntary nature of other types of insurance are false because they will not improve the lives of Ukrainians.

 

References

1. Pensiina reforma: chomu perehid do nakopychuvalnoi systemy nemynuchyi [Pension reform: why the transition to a funded system is inevitable]. (2018, April 24). www.epravda.com.ua. Retrieved from https://www.epravda.com.ua/ columns/2018/04/24/636314/ (viewed 11.01.2019) [in Ukrainian].

2. Libertarianskyi pohliad: chomu socialna derzhava – naibilshe zlo dlia Ukrainy [Libertarian view: why a social state is the greatest evil for Ukraine]. (2018, October 25). www.pravda.com.ua. Retrieved from https://www.pravda.com.ua/ columns/2018/10/25/7196216/ (viewed 11.01.2019) [in Ukrainian].

3. Pensiina reforma: yak demontuvaty solidarnu systemu [Pension reform: how to dismantle the solidarity system]. (2018, May 14). www.epravda.com.ua. Retrieved from https://www.epravda.com.ua/columns/2018/05/14/636719/ (viewed 11.01.2019) [in Ukrainian].

4. Libertarianskyi pohliad: ekonomichnyi rozvytok pochynaietsia zi zminy svitohliadu [Libertarian view: economic development begins with a change in the outlook]. (2018, October 7). www.pravda.com.ua. Retrieved from https:// www.pravda.com.ua/columns/2018/10/7/7194311/ (viewed 11.01.2019) [in Ukrainian].
Published
2019-07-02
How to Cite
Koval, O. (2019). LIBERTARIAN AND SOCIAL INSURANCE IN UKRAINE. Strategic Priorities, 49(1), 102-109. Retrieved from https://niss-priority.com/index.php/journal/article/view/243