'Economic Passport' for Ukrainians: What the Funds Can Be Spent On and How It Will Work

The Office of the President forecasts that the decision will boost the real estate market.

President of Ukraine Volodymyr Zelensky submitted to the Verkhovna Rada a draft law “On the Economic Passport” providing for the creation of a Future Generations Fund, reports the press service of the Office of the President.

According to the document, the purpose of the Fund will be to accumulate state contributions in favor of its participants, with subsequent investment of assets and payments to its participants.

The funds will accumulate in accounts of children born after January 1, 2022. It is this provision that has sparked a wave of criticism on social media. Users consider it unfair to children born before that date.

The Fund's annual budget is formed from state funds in the amount of 1% of the value of all minerals extracted on the territory of Ukraine; and funds the Fund receives as grants or attracts by other means from any state or private sources not prohibited by law.

These funds will accumulate in the Fund and, starting in 2040, must be distributed evenly among account holders after they reach the age of majority. The payments are non-refundable financial assistance.

After a citizen of Ukraine reaches the age of majority, these payments may be used for:

• education at educational institutions in Ukraine;
• purchase of own housing in Ukraine;
  
• transfer of funds to one's account in a non-state pension system;
  
• treatment (upon reaching the age of 18).
  

The president also submitted to parliament related draft laws: “On Amendments to the Budget Code of Ukraine Regarding State Contributions to the Economic Passport System”, “On Amendments to the Tax Code of Ukraine on Taxation of Future Generations Fund Funds” and “On Amendments to the Code of Ukraine on Administrative Offenses and the Criminal Code of Ukraine Regarding Liability for Violating the Interests of Future Generations Fund Participants.”

These documents propose to regulate issues of making state contributions to the economic passport system, exemption from taxation of funds raised for the benefit of Fund participants and income received by a taxpayer from the Fund, as well as issues related to violations of the interests of Fund participants.

“The adoption and implementation of these laws will invest in Ukrainian youth and create conditions for the development of the economy and education in Ukraine,” the Office of the President said.

Volodymyr Zelensky
President of Ukraine

Funds that young people can receive to pay for their education will give them more flexibility in choosing their educational path. Young people's educational opportunities and prospects in the labor market will depend less on their parents' financial means.

The Office of the President also forecasts that with the start of the Fund's first payout, “demand for real estate and for investment in pension funds will increase, which will become a powerful impetus for the development of the real estate market and the funded pension system.”

Volodymyr Zelensky
President of Ukraine

The option to use funds for treatment will help children with serious illnesses cover, at least partially, necessary expenses. At the same time, parents will be able to independently choose the institution where such help can be received. This will contribute to the development of relevant medical services.