When and who will retire later: the IMF insists on raising the retirement age

In Ukraine, the lowest pensions in Europe, while Ukrainians on a holiday of all come earlier – in 60 years. At the moment the Cabinet of Ministers agrees with the next IMF credit tranche. As Minister Andriy Reva, one of the main recommendations, which insist that the international partners – increase the retirement age. Prime Minister Volodymyr Groysman have said that plans to review the age of retirement at the moment. The website “Segodnia” found out why and how in Ukraine can raise the retirement age.

Why raise the retirement age

In the European Union the average age of retirement has reached the age of 65. Moreover, the European Commission recommended to raise the retirement age to 70 years. The Germans now retire at the age of 67. Of all the European countries early retirement age occurs the Ukrainians – in 60 years. In Belarus, President Alexander Lukashenko, the retirement age increased by five years.

Raising the retirement age – a necessary step, which are all developed countries. This is due to the global trend of population ageing. A generation of children is declining – the Ukrainians as Europeans, are in no hurry to have large families, while the elderly is not decreasing. Now in Ukraine the ratio of pensioners and employees, who pay contributions to the Pension Fund, – 11 to 10. If the situation does not change, according to estimates of the Institute of demography and sociological research, in 2050, ten Ukrainians will have their taxes contain 15 seniors.

If Ukraine is to increase the retirement age to 65 years – the number of pensioners will decrease by one million. If to 62 years – 500 thousand, calculated at the Institute.

“International standards like the Convention on social security, suggesting that retirement age is 65 years you can set no matter what the circumstances. In fact, to say that direct limits in international practice there. Low retirement age is not accompanied by a prolonged lifespan. People who live to 60 years, with the same probability will live up to 63 years”, – says senior researcher of the Institute of demography Lydia Tkachenko.

So, if every year to raise the retirement age by six months, the number of Ukrainians who retire, will be two times lower.

At the moment the situation in the Pension Fund (PF) is critical, I am sure the Minister of social policy Andrei Reva. Last year the deficit of the Fund has reached 145 billion, this year, according to the budget, a “hole” in PF will reach 141 billion. According to experts, one way to reduce the deficit – raising the retirement age.

As the retirement age may increase in Ukraine

A few weeks ago edition EP, said that they managed to get a draft Memorandum with the IMF. According to the website, starting from July this year, the retirement age will annually increase by four months for men, and for six months starting in 2021 for women. As a result, in 2027, the retirement age of men and women will reach 63 years.

Minister Andriy Reva in the comments to the same publication confirmed that the IMF demands to raise the retirement age, however, the Cabinet of Ministers with this requirement does not agree. “The IMF insists on the inclusion in the draft Memorandum item about raising the retirement age – said Reva. – We categorically against”.

Arguments for:

  • Will decrease the number of pensioners
  • Increase the number of contributors to the ESV at the expense of those who were supposed to be retired, but will continue to work
  • Reduced risks of poverty due to a longer period

Arguments against:

  • Age discrimination – Ukrainians over the age of 60 years it is difficult to find a job
  • Need to reform employment, medicine and education
  • Ukrainians are less likely to live in retirement

From the point of view of the IMF, raising the retirement age – normal, says senior researcher of the Institute of demography and social studies Lydia Tkachenko. Such a recommendation, the expert said, has been voiced several times already.

The myths about raising the retirement age

Myth # 1: Ukrainians simply do not live to retirement. Need to consider average life expectancy and life expectancy after age 60. On average, men live on pensions 14.8 years and women 19.9 years. In this regard, I’m sure the main countries demographer Ella Libanova, to raise the retirement age for men is impossible.

“If we have a retirement age of 60 years, our men have the chance to live in retirement for almost 15 years. If we retirement age will raise (men – approx.ed.) to 65 years, they will remain to live only 12 years. It is too little, if we assume that 40 years, they work somewhere and pay the fees, that’s just cruel. In women, the situation is better, they had all the demographic bases to raise the retirement age to 60 years”, says Ella Libanova.

Myth No. 2: the Retirement age will increase immediately. Even if the government decides to raise the age of retirement, to a large extent it will affect those generations, who will retire after 15 years (increase occurs gradually).

Experts advise: to chart the increase in the retirement age on the next generation, when the demographic crisis to escalate. This will help to balance the amount of those who are beginning to work and those who retire.

Myth # 3: If you raise the retirement age, will be able to eliminate the deficit of the PF. In fact, raising the age of retirement significantly affect the situation. “To raise the retirement age – dead poultices,” says senior expert of the World Bank Alexei Sluchinski. Provided that the deficit has reached 141 billion, saved a billion pension system will not save.