What to Do If Your Employer Failed to Pay Pension Fund Contributions

As is well known, employment periods acquired after 1 January 2004 are taken into account for pension purposes provided that the employer paid insurance contributions based on the employee’s salary. If the insurance contribution was paid on the basis of a salary equal to or higher than the statutory minimum, the entire month is included in the insurance record. If the contribution paid was lower than the minimum contribution, the relevant period is included proportionally to the amount actually paid. If no insurance contribution was paid, the relevant period of employment may not be included in the insurance record for pension purposes.

An insurance contribution is a contribution to the pension insurance system paid by the employer at the rate of 22% of the employee’s official salary. It is also sometimes referred to as a Pension Fund contribution.

Insurance contributions directly affect a person’s pension entitlement and pension calculation.

What should you do if you discover that your employer failed to pay insurance contributions in full or in part?

If contributions were only partially paid, one possible solution is to make an additional payment for the missing days in the relevant months through the Pension Fund. The advantage of this option is that the amount of the additional payment may be calculated on the basis of the rates applicable during the relevant period rather than the rates applicable today.

If, however, you discover entire months for which no insurance contributions were paid at all, there are two possible options.

The first option is to purchase the additional insurance record required to qualify for a pension through the tax authorities. This can be a relatively expensive option. The cost of one month is equal to two minimum insurance contributions applicable on the date of payment. In 2023, the cost of purchasing one month of insurance record was UAH 2,948.

The second option is to apply to the court and request that the periods during which the employer failed to pay insurance contributions to the Pension Fund be included in the insurance record for pension purposes. Courts often resolve such disputes in favour of pensioners. Their reasoning is that an employee or pensioner cannot be held responsible for the employer’s failure to pay the mandatory contributions and charges due in respect of the employee’s salary.

The preferable solution is, of course, for the employer to pay the outstanding insurance contributions. However, this is not always possible. The enterprise may have been liquidated or may lack the financial capacity to make the required payments for various reasons.

Therefore, before applying to the Pension Fund, we recommend checking whether insurance contributions have been paid for all periods of your employment since 1 January 2004. This information can be verified by obtaining an OK-5 certificate from the Pension Fund or through the Diia portal.