Ukraine's government has launched a completely new form of non-government pension system to complement its traditional state-run pension system.
The new system, based on a presidential decree, allows pensioners to invest in projects run by state-owned construction company Kyivmiskbud.
Under the decree, all Ukrainian citizens may open personal pension accounts in Arkada bank. Deposits will earn annual interest of 10 percent until the depositor reaches pension age, at which point the depositor receives principal and interest back in monthly installments. The depositor may choose to receive his or her pension over five years, or over the rest of his or her life.
Hold on a minute: If annual interest is 10 percent, and typical annual inflation in Ukraine 20 percent, what we have hear is a scam, right?
Wrong, say representatives of Arkada bank. Deposits are protected from inflation with the special investment unit called OdIn, which stands for 'unit of investment.' The OdIn is entirely dependent on the real level of prices, and ensures that depositors will be paid back at real interest rates.
To ensure that lofty 10 percent real interest rate, Arkada invests depositors' money into low-risk projects being carried out by Kyivmiskbud.
Credits to Kyivmiskbud are long-term loans secured by future residential construction projects.
The government-mandated pension system follows a model first tried in Chile several years ago, when, according to Ukrainian officials, Chile was roughly at the same stage of economic development as Ukraine is today.
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The new luxury residential building going up on 13 Dmytrivska off Ploshcha Peremohy should have no problem drawing in Ukraine's newly rich.
The building's apartments will offer one feature that few other structures in Kyiv can boast of: fireplaces that actually work.
The company doing the construction work, Poznyakyzhylbud, is well-known for exuberance. But the fireplaces aren't extravagances – for some Ukrainians they're necessities, according to ad manager Petro Struts.
'Whenever we build we are striving to develop a special housing design with our tenants' requirements in mind,' Struts said.
As with many similar high-end residential construction projects, the brick building on Dmytrivska is being built with funds provided by future tenants.
The project was initiated at the end of this February and is due to be completed by the end of the year.
Once built, the 5,000-square-meter house will host up to 16 apartments on roughly eight floors.
'Unlike our chiefly big houses, the new building is most likely to be like a comfortable country-cottage in Kyiv's heart,' Struts said.
As with most Poznyakyzhylbud resident projects, future tenants have the flexibility to customize the interior of their apartments, which will average 137.4 square meters, including a living room, two bedrooms, a kitchen, two bathrooms, a hall and a veranda.
The building will have its own private ZhEK, or housing committee, which will run the building on its tenants' behalf.
To top it off, the residential complex will also include its own medical center, private doctor and an on-site travel agency.
The present purchase price ranges approximately from $550 to $720 per square meter – which means the least expensive apartment will be priced at just under $76,000.
Anna Stepanenko can be reached at [email protected].
