Can an Employer’s Failure to Pay Insurance Contributions Affect Pension Entitlement?

Pension disputes in Ukraine often arise due to the failure to include certain periods in a person’s insurance record, particularly when it comes to preferential pensions for combat veterans or former law enforcement officers. One notable example of such a pension dispute is administrative case No. 400/2492/24, considered by the Supreme Court of Ukraine. This case concerns the granting of a pension to a former tax police officer who also has the status of a combat veteran. Below, we examine the details of this case, focusing on the key issues: insurance record, employers’ failure to pay insurance contributions, the role of the Pension Fund, and the position of the Supreme Court.

Facts of the Case and Claims

The claimant filed a lawsuit against the Main Departments of the Pension Fund of Ukraine (PFU) in the Mykolaiv and Ivano-Frankivsk regions. He sought to have the PFU’s failure to include certain periods of employment and service in his insurance record declared unlawful and to oblige the Fund to grant him a preferential old-age pension as a combat veteran pursuant to paragraph 4 of Article 115 of the Law of Ukraine “On Compulsory State Pension Insurance” (Law No. 1058-IV).

In particular, the claimant requested that the following periods be included:

• Service in the Armed Forces of the USSR (1986–1992), including preferential calculation of the relevant period.
• Service in the internal affairs bodies and the tax police (2000–2001).
• Employment as a director of private companies: LLC “Law Firm ‘Pretor’” (2002–2006), LLC “Ruden” (2007–2014), and LLC “Lendar” (2015–2018).

At the time of filing his application with the PFU on 7 March 2024, the claimant was 54 years old, while his calculated insurance record amounted to only 12 years and 2 months. A preferential pension required reaching the age of 55 and having 25 years of insurance record. The PFU refused to grant the pension, citing the absence of information on the payment of insurance contributions for the disputed periods in the Register of Insured Persons (Form OK-5) and insufficient documentary evidence.

The claimant argued that the failure to pay insurance contributions was not his fault but resulted from the actions of his employers (policyholders). He emphasized that responsibility for making the relevant payments rested with the employers rather than the employee and referred to the constitutional principles of social protection. A similar position had been expressed in previous Supreme Court judgments, including the decision of 24 May 2018 in case No. 490/12392/16-а.

Decisions of the Lower Courts

On 3 June 2024, the Mykolaiv District Administrative Court partially upheld the claim. It declared the PFU’s refusal unlawful, ordered the inclusion of periods of employment in the tax police and private companies, except for certain periods affected by the non-payment of contributions, and required the PFU to reconsider the claimant’s application. The court reasoned that the fact of employment had been confirmed by the employment record book and other documents and that an employer’s failure to pay insurance contributions should not deprive an employee of the relevant insurance record.

However, on 9 September 2024, the Fifth Administrative Court of Appeal overturned this decision and dismissed the claim in full. The appellate court reasoned that, as a director of the companies, the claimant himself was responsible for paying insurance contributions and that deficiencies in the employment record book, including corrections and missing signatures, rendered the evidence insufficient. In addition, the court noted that the claimant had not reached the required age at the time of his application.

Position of the Supreme Court

In its judgment of 8 October 2025 in case No. 400/2492/24, administrative proceedings No. К/990/34825/24, the Supreme Court considered the claimant’s cassation appeal. The panel of judges, consisting of S. M. Chyrkin, V. M. Kravchuk, and Ya. O. Bernaziuk, concluded that the decisions of the lower courts could not be regarded as lawful and well-founded because the relevant circumstances had not been fully established.

The Supreme Court emphasized several key legal principles:

• Insurance record includes periods during which a person was subject to compulsory state social insurance and insurance contributions were paid (Article 24 of Law No. 1058-IV). However, responsibility for the non-payment of contributions rests with the policyholder (employer), rather than the employee (Articles 20 and 106 of Law No. 1058-IV).
• Depriving an employee of insurance record because of an employer’s actions is contrary to the constitutional principles of social protection (Article 46 of the Constitution of Ukraine).
• The fact of employment may be confirmed by an employment record book, employment orders, and other documents, while the absence of information on contributions in the register cannot, in itself, constitute sufficient grounds for refusal.
• Holding the position of company director does not automatically make a person a policyholder. It is necessary to determine whether the claimant was an owner of the company or an employee.

The Supreme Court criticized the appellate court for disregarding the principle of official clarification of all relevant circumstances under Articles 9 and 90 of the Code of Administrative Procedure of Ukraine. The lower courts had failed to establish who was actually responsible for paying the contributions, the reasons for the absence of the relevant information, and what measures the PFU had taken to recover the outstanding contributions. Deficiencies in the employment record book could not, by themselves, be decisive grounds for refusing to recognize the relevant periods.

Since the court of cassation does not have the authority to establish new facts under Article 341 of the Code of Administrative Procedure of Ukraine, the Supreme Court overturned the judgment of the appellate court and remitted the case for a new hearing before the court of first instance pursuant to paragraph 2 of part 1 of Article 349 of the Code of Administrative Procedure of Ukraine. This makes it possible to conduct a more thorough examination of the evidence and ensure a proper determination of the claimant’s pension entitlement.

Conclusions and Significance for Social Protection

This case highlights an important problem within Ukraine’s pension system: many people face the exclusion of periods from their insurance record because employers failed to pay mandatory insurance contributions, particularly in the private sector. The Supreme Court confirmed that the state must protect the rights of insured persons rather than make employees bear the consequences of their employers’ failures. For former tax police officers and combat veterans, this means that confirmed periods of service may be taken into account when determining entitlement to a preferential pension.

The Pension Fund is required to interact more actively with policyholders and use the available mechanisms for recovering outstanding insurance contributions. Disputes of this kind also contribute to the development of legal approaches aimed at preventing pension rights from being restricted by purely bureaucratic obstacles.

In summary, administrative case No. 400/2492/24 demonstrates how judicial protection can help restore social security rights. Individuals facing a refusal by the PFU should retain and collect all available supporting documents, including employment record books and salary certificates, and consider challenging an unlawful refusal in court. Such cases are important not only for protecting individual pension rights but also for promoting a fairer pension system in Ukraine.