Features of taxation of NPF assets

A non-state pension fund has the status of a non-profit organization; therefore, it isnot a subject to income taxes. Thus, income from investment activities with the NPF's assets (dividends on shares, interest on deposits and bonds, etc.) are exempt from taxation that allows distributing the fund's income in full between its participants in proportion to the amount of their pension contributions. It also allows to reinvest these profits more effectively.

Benefits during the period of contribution. Tax discount

During the period of contribution, each individual contributor has the opportunity to take advantage of the tax discount and return paid personal income tax (18%) from the amount of pension contributions paid in his/her favor and in favor of his/her relatives (first-degree relation) for the previous year.

To do this, it is necessary to include information on such contributions into the annual tax declaration with attached copies of a pension contract, payment documents and annual statement of a pension account.

The tax discount is applied if the amount of monthly contributions does not exceed UAH 2 270,00 per month (calculated as the monthly subsistence minimum multiplied by a factor of 1.4). To determine the annual amount, this indicator is multiplied by 12. That is, the maximum amount of contributions, on which it is possible to receive a tax discount in 2021 is UAH 38 136. For 2020 this amount was UAH 35 280.

The maximum amount of contributions to the benefit of family members (first-degree relation: children, parents, husband, wife) for which contributor can get a tax discount cannot exceed 50% of UAH 3 178, that is UAH 1 589 per month or UAH 19 068 per year (for 2021).

There are certain tax benefits for businesses, who make contributions in favor of their employees.

Taxation of pension payments

There are special terms of taxation that are in force during the period of payments. The NPF make pension payments for a specified period or one-time pension payments in non-cash form by transferring funds to the bank account indicated by the member. The tax agent is the Administrator of a non-state pension fund - it withholds the personal income tax and the military fee from pension payments.

The terms of taxation differ depending on payment type. There are also certain groups of participants who do not pay taxes.

  • Payments for a specified period

    60% of each payment are taxed by personal income tax and military fee (18 + 1.5 %).

    The minimum payment period for a specified period cannot be less than 10 years

  • One-time pension payment

    100% of the payment amount are taxed by personal income tax and military fee (18 + 1.5 %).

    One-time payment upon reaching the retirement age is possible, if the sum of savings does not exceed:

    • From January 1, 2022: UAH 116 040
    • From July 1, 2022: UAH 121 580
    • From December 1, 2022: UAH 125 580
  • Exemption from taxation

    • participants over 70 years old;
    • participant - disabled person of Group I;
    • heir of a participant (first-degree relation).

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