How to Include Individual Entrepreneur (FOP) Activity in the Insurance Record for a Pension in Ukraine
Applying for a pension in Ukraine often involves disputed issues, particularly when it comes to including periods of business activity as an individual entrepreneur in the insurance record. The reason is that the applicable legislation provides different procedures for crediting entrepreneurial activity before and after 2000. A person must confirm periods of business activity before 2000 with various documents, including extracts, certificates confirming the payment of contributions, patents, and other documents. Periods of entrepreneurial activity after 2000 are included in the insurance record only if the required contributions were paid.
The problem is that many entrepreneurs no longer have documents relating to earlier periods of their business activity, either because such documents were lost or submitted to the tax authorities. In some cases, information on contributions paid after 2000 is also missing from official registers, even though the person has evidence confirming such payments. As a result, the Pension Fund of Ukraine may refuse to include these periods in the insurance record and, consequently, may sometimes refuse to grant a pension altogether.
A similar situation occurred in the case of Mr Doroshkov, who contacted our law firm after the Pension Fund refused to grant him a pension. From 1999 to 2016, Mr Doroshkov conducted business activity as an individual entrepreneur. However, almost the entire period was excluded from his insurance record because, according to the Pension Fund, he had failed to provide sufficient documents confirming the payment of the required contributions, while the relevant payment information was also absent from the official register. As a result, his application for a pension was rejected.
Having analysed the Pension Fund's refusal and the client's documents, we decided to file a claim with the court. Our legal position was based on the following arguments.
The Law of Ukraine "On Compulsory State Pension Insurance" provides for the inclusion of periods of entrepreneurial activity in the insurance record, subject to the payment of the required contributions.
Under the applicable regulations, periods during which an entrepreneur used the simplified taxation system may be included in the insurance record where there is a certificate confirming the payment of the single tax. Mr Doroshkov provided certificates and other documents confirming payment of the relevant tax.
A Decree of the President of Ukraine adopted in 1998 provided that a portion of the single tax was automatically transferred to the Pension Fund. Therefore, even in the absence of certain separate documents confirming the payment of pension contributions, the relevant period should be included in the person's insurance record.
In addition, the Supreme Court has repeatedly stated that errors or omissions in an employment record book or other documents cannot constitute grounds for depriving a person of the right to a pension. The Court has also emphasised that the responsibility for maintaining information concerning the payment of contributions rests with the tax and pension authorities.
After considering the case, the court of first instance fully supported our legal position and confirmed that the Pension Fund had unlawfully failed to include the periods of Mr Doroshkov's activity as an individual entrepreneur in his insurance record. Accordingly, the court ordered the pension authority to include the disputed periods in his insurance record and reconsider his application for a pension. Following an appeal, the appellate court also agreed with our arguments and upheld the judgment of the court of first instance.
Subsequently, the Pension Fund fully complied with the court judgment: Mr Doroshkov was granted a pension and received the pension arrears accrued during the period of the court proceedings.
The court judgments are available at the following links: https://reyestr.court.gov.ua/Review/118394092, https://reyestr.court.gov.ua/Review/122684558.
