Fundamentals of the Legislation of Ukraine on Mandatory State Social Insurance

Date of entry into force:
February 19, 1998

According to Article 1 of the Fundamentals, mandatory state social insurance is a system of rights, obligations and guarantees that ensures provision of social protection, which includes material support of citizens in case of illness, complete, partial or temporary loss of labor capacity, loss of the family provider, unemployment for reasons not depending on the citizen, as well as in the old age and in other cases provided for by the legislation, at the expense of monetary funds formed through payment of insurance premiums by the owner or its authorized body (hereinafter referred to as "employer"), citizens, and budget and other sources provided for by the legislation.

The right to receive support in the scope of mandatory state social insurance according to the Fundamentals is granted to insured citizens of Ukraine, foreign citizens, stateless persons and their family members that reside in Ukraine, unless otherwise provided for by the legislation of Ukraine and international agreements of Ukraine ratified by the Verkhovna Rada of Ukraine (Article 3 of the Fundamentals).

Depending on the insured risk, there are following types of mandatory state social insurance:
  • pension insurance;
  • insurance related to temporary loss of labor capacity and burial expenses;
  • medical insurance;
  • insurance against industrial accidents and occupational diseases that caused loss of labor capacity;
  • unemployment insurance;
  • other types of insurance provided for by the legislation of Ukraine.

The principles of mandatory state social insurance are determined by Article 5 of the Fundamentals.

The subjects of mandatory state social insurance are insured citizens and, in some cases, their family members and other persons, insurers and the insured (Article 6 of the Fundamentals). A natural person is insured if mandatory state social insurance is exercised in their favor. The circle of persons that can be insured in the scope of mandatory state social insurance is determined by the Fundamentals and other laws adopted according to them. The insured in the scope of mandatory state social insurance are employers and insured persons, unless otherwise provided for by the laws of Ukraine. The insurers are specialized insurance funds for:
  • pension insurance;
  • medical insurance;
  • insurance related to temporary loss of labor capacity and burial expenses;
  • insurance against industrial accidents and occupational diseases;
  • unemployment insurance.

According to Article 7 of the Fundamentals, the following are subject to mandatory state social insurance:
  • persons employed under a labor agreement (contract): a) by enterprises, organizations and institutions regardless of their form of ownership and business; b) by natural persons;
  • self-employed persons (members of creative unions, creative workers who are not members of creative unions) and natural persons entrepreneurs.

The insured term is a period (time) during which a person is subject to mandatory state social insurance, and during which insurance premiums are being paid (by the person or their employer), unless otherwise provided for by the legislation. The specifics of calculating the insured term for certain types of mandatory state social insurance are determined by appropriate laws of Ukraine (Article 9 of the Fundamentals).

According to Article 10 of the Fundamentals, an employer is:
  • the owner of an enterprise, institution or organization, or a body authorized by them, regardless of the form of ownership, and type and form of business; as well as natural persons using hired labor;
  • owners of foreign enterprises, institutions and organizations (including international ones), as well as their branches and enterprises, which are located in Ukraine and use hired labor, unless otherwise provided for by international agreements of Ukraine ratified by the Verkhovna Rada of Ukraine.

Article 14 of the Fundamentals envisages that insurance funds are bodies that govern and manage certain types of mandatory state social insurance, accumulate insurance premiums, control the use of funds, ensure financing of expenses in the scope of mandatory state social insurance, and carry out other functions according to their approved statutes. Registering insured persons, providing for collection and accounting of insurance resources, controlling full and timely payment of insurance resources and maintaining the State Register of Mandatory State Social Insurance, including personified registration of data on insured persons, is carried out by the Pension Fund of Ukraine, according to the legislation. Insurance funds are non-commercial self-governing organizations. The resources of insurance funds are not included in the State Budget of Ukraine. Insurance funds act on the basis of statutes that are approved according to the procedure established by the laws of Ukraine on specific types of mandatory state social insurance.

The procedure for managing insurance funds is established by Article 15 of the Fundamentals.

Supervision over the activity of specialized funds for mandatory state social insurance is carried out by the Supervisory Council. The Supervisory Council controls execution of statutory tasks and designated use of the resources by the appropriate mandatory state social insurance funds. To this end, the Supervisory Council includes an equal number of representatives of the insured citizens, the employers and the state. The membership and authority of the Supervisory Council are determined by the laws on specific types of mandatory state social insurance (Article 16 of the Fundamentals).

The main sources of funds for mandatory state social insurance, according to the Fundamentals, are contributions of employers and the insured.

According to Article 21 of the Fundamentals, the single contribution for mandatory state social insurance is a consolidated insurance premium for pension insurance, insurance related to temporary loss of labor capacity and burial expenses, medical insurance, insurance against industrial accidents and occupational diseases that caused loss of labor capacity, and unemployment insurance, which is paid, on a mandatory basis, by the insured, in order to ensure the exercising of rights of insured persons to receive insurance payments (services) in the scope of social insurance. The amount of the single contribution for mandatory state social insurance and the ratio of its distribution between types of mandatory state social insurance are determined by the Verkhovna Rada of Ukraine.

Insurers, while adhering to the requirements of the legislation, draft normative legal acts on the procedure for preparing and executing the budget, making payments, financial accounting and reporting, and other documents related to their activity (Article 23 of the Fundamentals).

The following types of social services and material support are provided in the scope of mandatory state social insurance:
  • pension insurance: 1) age pension, disability pension due to general disability (including non-work-related injuries and childhood disability); 2) pension due to loss of the family provider; 3) medical preventive and rehabilitation measures; 4) burial benefits for pensioners;
  • medical insurance: 1) diagnostics and outpatient treatment; 2) inpatient treatment; 3) providing finished drugs and medical products; 4) preventive and educational measures; 5) medical rehabilitation of persons after particularly grave surgeries or persons with chronic diseases;
  • insurance related to temporary loss of labor capacity and burial expenses: 1) temporary loss of labor capacity benefits (including child caretaking); 2) pregnancy and childbirth benefits; 3) burial benefits (except pensioners, unemployed and persons deceased as a result of an industrial accident); 4) providing for health improvement measures;
  • insurance against industrial accidents and occupational diseases: 1) prophylactic measures aimed at preventing industrial accidents and occupational diseases; 2) restoring the health and labor capacity of the injured or diseased person; 3) benefits for temporary loss of labor capacity as a result of an industrial accident or occupational disease; 4) compensation of damages caused to the employee by injury or another health damage, in relation to their performance of their labor duties; 5) pension due to disability caused by an industrial accident or occupational disease; 6) pension due to loss of the family provider as a result of an industrial accident or occupational disease; 7) burial benefits for persons who had died as a result of an industrial accident or occupational disease;
  • unemployment insurance: 1) unemployment benefits; 2) compensation of expenses related to professional training, retraining and professional orientation; 3) subsidies to employers for employment of the unemployed, including first employment of young people; 4) burial benefits for the unemployed; 5) prophylactic measures aimed at preventing insured event.
Article 27 of the Fundamentals envisages that payments and social services to which an insured person is entitled in the scope of mandatory state social insurance may be stopped:
  • if payments have been assigned based on documents containing false data;
  • if the insured event occurred through actions committed by the person that lead to criminal liability;
  • if the insured event occurred through willful actions of the person;
  • due to failure of the insured person to fulfill their obligations related to mandatory state social insurance;
  • in other cases provided for by the laws.

The liability of the insured, insurers and entities providing social services is determined by Chapter VII of the Fundamentals.
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