Details of “modernization”: the future pensioners cut back payments, and some will pay 1000 hryvnia

In Ukraine already this year plan to “modernize” the pensions of millions of Ukrainians. With this initiative in 2016 was made by the Prime Minister Vladimir Groysman. At the end of last week when the Ministry of social policy has gathered a group of experts, who discussed the details of the coming “modernization”. As told “Today” the members of the working group, the government is planning to recalculate pensions based on the new average wage, and after this rate freeze for several years. As a result, existing pensioners will receive more Ukrainians and those who have yet to retire, you’ll lose some benefits.

How to change pensions

Last year the Minister of social policy Andrei Reva announced the coming of “modernity” of pensions based on the new average wage. According to a member of the working group under the Cabinet of Ministers, a senior researcher of the Institute of demography and social studies Lydia Tkachenko, the recalculation of pensions will take into account the average salary of 3764 the hryvnia. Now the part of pensions calculated with the average wage of all 1917,91 hryvnia.

Photo: archive

How is the pension:

P = SN * KZ * KS

P – pension
SN – salary (average salary over the three years prior to retirement)
KZ – coefficient of wages (the ratio of his salary to the national average)
COP – coefficient of insurance (each year is multiplied by 1.35)

The average salary in Ukraine will increase, but at the same time, as noted by Lydia Tkachenko, his plan to freeze for several years. In addition, the Ministry serves to reduce the coefficient of experience from 1.35 to 1. As a result, the Ukrainians, who will retire in the next few years (starting in 2018), will lose some benefits.

“It is very profitable for the new entrants. Indeed, will use the updated wage base, but they want her for a number of years to freeze. Everything is done in manual mode, and for new pensioners it is a daylight robbery,” says Lydia Tkachenko.

“It is very profitable for the new entrants. Indeed, will use the updated wage base, but they want her for a number of years to freeze. Everything is done in manual mode, and for new pensioners it is a daylight robbery,” says Lydia Tkachenko.

At the same time, existing pensioners will receive more. For example, the pension for the Ukrainian, who has worked for 35 years and received an average salary, can be calculated as: 1917,91 * 1 * 0,47 = 901,4 hryvnia. Given that the pension age in Ukraine can not be lower than 1247 hryvnia, the hryvnia 345,6 pay from the Pension Fund. After “modernizing” the same pension will be recalculated according to the formula: P = 3764 * 1* 0,35 = 1317 UAH. However, if wages, for example, was twice the national average, is now retired (with 35 years of experience) gets 1800 hryvnia, and after the “modernization” will be to 2634 hryvnia.

“There are people who for 50 hryvnia will increase the pension, and there are those who raise more than 1,000 hryvnia. It turns out a very large gap. To say that this is true, it is difficult. As shown by previous experience, while modernizing the biggest increase are people who and so as for Ukraine, quite a lot get. And those people who have meager pensions, will receive 50-200 USD. But now that the 200 USD? This is not the amount that you can say that this is a significant increase in their pension,” says Lydia Tkachenko.

As reported “Today” source in the Ministry, after the “modernizing” more than 1,000 hryvnia rich 1.1 million pensioners. Increase from 900 to 1000 hryvnia unable to 487 thousand pensioners, from 700 to 800 UAH 460 thousand. The rest (and more than 3.5 million Ukrainians) the pension will rise from 50 to 700 hryvnia.

Main problem: where to get money

The “modernizing” of pensions will cost the state at 47.7 billion hryvnia. On request “Today,” the Pension Fund said in the budget for this year of “modernity” is not provided. “The budget are based on current legislation”, – explained in Department.

Money on recalculation of pensions to plan for the expense of an overfulfillment of the budget of the Pension Fund. Most likely, it will hold in the second half of this year. Pension Fund (PF) replenished by contributions from employees of Ukrainians (22% of ERUs from each paycheck). For the first two months of last year, the PF has received 17.7 billion hryvnia, and for the first two months of 2017 20.6 billion hryvnia. Just this year the budget provides for revenues from ERUs in the amount 163,6 billion, and last year 107,1 billion.

Lydia Tkachenko suggests that the decision to “modernizing” depends not only on fulfillment of the budget, but also on the political will of the country. “Now everything will depend not on how much they will collect additional funds, and how they coordinate this with the Ministry of Finance. It is now rather a question of policy, much depends on what decision will accept the highest officials of our state,” suggests a member of the working group under the Ministry of social policy.

Note, at the moment, 10 employees comprise more than 11 pensioners. According to estimates PF, 25% of Ukrainians are employed informally. Of the 26 million able-bodied Ukrainians are only 16 million, and ERU only pay 10.1 million people. The rest – farmers, service workers, etc. – have the right not to pay and actively use this right. According to estimates of the Institute of demography in 2050, in Ukraine the ratio of workers to pensioners will be 10 to 15.

What changes to expect Ukrainians

In the Pension Fund Today said that at the moment the possibility to pay the ERU of all working Ukrainians. “In the World applies the obligation of payment of insurance contributions for the whole working population. We’re still studying this and other methods. But there are methods of attraction as a voluntary and compulsory payment”, – says Deputy Chairman of PF Nicholas Saber.

There are other innovations solidarity system. Missing insurance period can be purchased for 704 UAH/month. For example, if you do not have five years, you will have to pay 42 240 hryvnia. To learn more about how solidarity can change the system, infographic, prepared by the site Today.

We will remind, in may the minimum pension in Ukraine will rise from 1247 to 1312 hryvnia, and in December – up to 1373 UAH. The average pension at the end of this year will reach more than UAH 2000.