An urgent problem in the field of labor relations is the legalization of the payment of wages and employment, which directly affects the implementation of insurance payments and the provision of social services, pension provision of employees and the filling of budgets at all levels.
This was reported in the Main Department of the Pension Fund of Ukraine in the Lviv Region.
According to the legislation, the amount of the pension depends on the insurance experience and earnings of the employee, from which the insurance contributions to the Pension Fund are actually paid. In the event that a person works illegally, without an official registration of labor relations, for the state, he is considered unemployed, and the period for which he received wages “in an envelope” is not included in the insurance experience necessary for the appointment of a pension.
As a reminder, the insurance period is the period during which a person is subject to mandatory state pension (social) insurance and for which monthly insurance premiums are paid in an amount no less than the minimum insurance premium. To date, the minimum insurance contribution is equal to the product of the minimum salary and the rate of the single social contribution established by law for the month for which the salary is calculated, and is 1,474 UAH (6,700 UAH × 22%). If the accrued salary of an employee is less than the minimum established by law, the employer is obliged to add the social insurance to the minimum insurance contribution.
Mostly, the problematic question regarding the legalization of wages arises for subjects of entrepreneurial activity – natural persons. In order to enroll individual entrepreneurs for a full month in the insurance period, it is necessary to pay a single social contribution in an amount not less than the minimum insurance contribution, and also do not forget to submit an annual report on the calculation of the single contribution to the territorial bodies of the State Tax Service. At the same time, the obligation to pay a single social contribution does not depend on the fact of receiving or not receiving income from entrepreneurial activity.
Please note that the right not to pay social security during martial law does not include the corresponding periods of work in the insurance record. Only those periods of employment for which insurance premiums have been fully paid are included in the insurance length of service.
We emphasize that the period during which there is arrears from the single social contribution will not be included in the insurance period until the debt is fully repaid.
It should also be noted that in accordance with the Law of Ukraine “On Mandatory State Pension Insurance” (hereinafter – Law No. 1058), the appointment of an old-age pension is carried out under the conditions of reaching the retirement age (for men and women – 60 years) and having at least 30 years of insurance experience this year, during the next five years the requirements for the number of years of official work will increase every year. That is, persons who will reach retirement age in 2028 will have 35 years of insurance experience required to receive a pension.
If a person does not have the necessary insurance experience by the time he reaches retirement age, he can retire at a later age. In particular, in 2023, with 20 to 30 years of insurance experience, a person will acquire the right to receive an old-age pension after reaching the age of 63, and with 15 to 20 years of experience, only after reaching the age of 65 (part 1 -3 Article 26 of Law No. 1058).
Insurance length of service and payment of social insurance guarantee employees social protection: payment of sick leave, assistance in case of unemployment, accident at work or occupational disease, pension. And you can check your insurance history, paid insurance premiums and accrued salary on the web portal of electronic services of the Pension Fund of Ukraine.
“In the conditions of a full-scale war, one of the main factors for victory is the support of the state, which directs all its capabilities to support the Armed Forces of Ukraine. Paying taxes is more important than ever. Everyone who considers himself a Ukrainian and a citizen of our state must understand that declared work – this is the way to a free, independent, economically strong state!”, the Pension Fund summarized.