Pension reform in Ukraine. Major changes

Пенсионная реформа в Украине. Главные изменения

Pensions in Ukraine will be charged otherwise

Major changes to the pensions of Ukrainians: a reference to the insurance period, annual indexation, increase of minimal salary.

The Verkhovna Rada passed the pension reform. N6614 for the bill in the second reading voted 288 deputies with the required minimum of 226 votes.

Before the draft at the session hall were made by the Prime Minister Volodymyr Groysman, who called on parliamentarians to vote for the “historic decision”.

From the Bloc Poroshenko for the pension reform voted by 122 people, from the people’s front 75, the Opposition bloc – 0, from Self-help – 14, the Radical party of Oleh Lyashko – 17, Batkivshchyna – 0, from the will of the people – 15, Renaissance – 22, independent – 23. Against reform – 8, abstained – 23. Did not vote 27 MPs.

Major changes: reference to insurance experience, not age; annual indexation; increasing the minimum pension.

Корреспондент.net understood in detail the changes that await Ukrainian pensioners.


The age of retirement

The law does not provide for raising the retirement age, but introduces requirements for the insurance period. Rules are introduced in 2018.

For retirement at age 60 will need to have 25 years of insurance experience. If you experience 15 to 25 years of retirement will be to go in 63 years, with seniority of less than 15 years – 65 years.

The Ukrainians, who have no insurance experience, will be able to apply for social assistance upon reaching the age of 63, which will be determined on the basis of the family income of the pensioner.

All of the minimum insurance period will increase by one year every 12 months until 2028. Thus, from 2028 to retire at 60 will need to have 35 years of insurance experience.

If the time is not enough, it is possible to purchase, but not more than five years. One year of experience is 16 896 USD.

Those who worked for 40 years can retire at any time. But this rule will be implemented only after ten years.

For students-state full-time years of study will count in the seniority.


The amount of the pension

The amount of pension of each citizen of Ukraine, according to the law, will be calculated by the formula: Sz × ikz × KS. The greater the ratio, the higher the pension.

Sz – the size of the average wage in Ukraine for three years before applying for a pension; ikz – individual coefficient of wages (the ratio of the size of the wage relative to the average salary; KS – coefficient of insurance is defined as a multiplier of the length of years of seniority of the person on the value of one year of insurance.

The average base wage for calculating pensions will be 3 764 UAH 60 copey, which is almost three times more than before the reform – 1197 UAH.

The coefficient of the insurance period for calculating pensions was reduced from 1.35 to 1.

The minimum pension is set at 1452 UAH, which is 140 hryvnia more than it was prior to the law. “Minimal” gets eight million pensioners. According to the Ministry of social policy, that is about half the cost of the consumer basket for actual subsistence minimum.

The introduction of rules on automatic annual indexation (recalculation) of pensions from 2019 to protect against inflation: taking into account the financial possibilities of the joint system, but not less than 50 percent growth in average monthly wages in three years and 50 percent of the consumer price index.

Also as part of the law repealed a 15 percent reduction of pensions for 500 thousand working pensioners. Cancelled reducing the size of pensions for 104 thousands of women who prematurely retired at 55 years old.

Increase of pensions is planned retrospectively from 1 October in the framework of “modernization”.

After recalculation of the pensions of about 1.3 Millin Ukrainian pensioners will receive an additional 200 hryvnia per month. For the sum from 200 to 500 UAH will increase the size of pensions for 1.2 million people.

Almost two million pensioners will receive an increase to their pensions, amounting in the range of 500-1000 USD. More than 1,000 hryvnia pension will grow approximately 1.1 million citizens of Ukraine.

Special pensions and other issues

The law repeals the special pensions for civil servants, judges, scientists and other categories. They are translated to a common system of calculating pensions.

Also abolished the right to pension for length of service for employees in education, health, social welfare, prosecutors and others, who previously could retire early, for five to ten years before retirement age.

An exception is made only for military and law enforcement bodies.

The pension reform provides safeguards for disabled children, disabled children, pensioners, do not have the full experience and those who do not have the right to a pension , and am now 949 UAH.

The amount of the pension will increase by 45 per cent, 1373 hryvnia. Today in Ukraine such people about a million.

The bill removes restrictions for working pensioners on the simultaneous receipt of salaries and pensions. Previously, they were limited to 85 per cent of the prescribed pension. now working pensioners can simultaneously receive a salary and a pension.