Pension reform in Ukraine: to retire will be harder, and the retirement age and the size of payments will reconsider

Prime Minister Volodymyr Groysman presented a draft pension reform. If innovations will support the elections, the Ukrainians will retire under the new rules since October of this year. The size of payments will increase, and requirements for obtaining a minimum payments will toughen. The Ukrainians, who have 15 years of insurance experience, will retire at 65 years. The website “Today” figured out how the life of Ukrainians will change after the adoption of the pension reform.

That will change

For some Ukrainians will introduce a cumulative level. To pay for beneficiaries who are entitled to early retirement, are employers. Rate social contribution will increase from 22 to 37%. This is the first grace the list, which includes miners, some doctors, employees of chemical industry, subway, etc. From January 2019, the additional contributions of workers in these professions who are younger than 35 years, will not accumulate in the Pension Fund and an individual account.

“It will also enable all future payments of early retirement pensions to be funded no additional overhead on running, but at the expense of funds accumulated in the professional systems. To administer individual pension accounts at the Pension Fund will be created saving Fund” – say in Parliament. For employees second preferential list (less harmful, but difficult working conditions) will have to pay a social contribution of $ 29, not 22% of salary.

Insurance experience will increase, and those who have not “earned”, will be released on a holiday later. Old-age pension, as before, will be paid with 60 years. However, it is necessary to have at least 25 years of service in 2017 year, and 35 years for those who retire in 2028 (year of the required experience will increase by one year).

If the Ukrainian, who in 2019 reached the 60th anniversary, while officially he was only 15 years of retirement, he will receive only 65 years. If the insurance period is less than 15 years, in 65 years, this Ukrainian will receive social assistance instead of a pension (the amount of aid depends on total family income).


Work experience will sell. If you find that you need to retire on time is not enough, you can either modify to 63 years, either to by seniority. One year of experience is 16 896 USD. You can buy up to five years, five years will cost 84 480 UAH. If you have no money, no experience, instead of a pension you can only claim social assistance, which is significantly below the minimum pension.

Working pensioners will not pay a “tax”. “Our reform provides that on the first of October we will offer to cancel the taxation of pensions for working pensioners,” – said Vladimir Groisman. When “tax” canceled, 650 of thousands of Ukrainians receive a pension in October about 17% higher. For example, if at the moment employed Ukrainians receive a pension in 2000 hryvnia, on the first of October it will increase to 2352 UAH.

The fact that under article 47 of the law “On state pension insurance”, working Ukrainians at the moment are only entitled to 85% of the earned pension. The rest is state. If after charging 15% of the working Ukrainian remains the pension is not less than the 1968 hryvnia (150% of the subsistence minimum for the disabled).

How to increase the pensions from the first of October

Part of the Ukrainians after viewing pensions will receive a pension twice. Approximately 1.3 million will get a raise to 200 hryvnia. For 1.2 million people, the increase will be from 200 to 500 UAH. Two million will get a raise from 500 to 1000 UAH and more than 1.1 million Ukrainians in retirement will receive a Supplement of 1000 UAH.

Pension of Ukrainians depends on three indicators: the average wage in the country at the time when he retired, length of service and the ratio of own wage to the average. Given that the average salary is growing every year, the pensions of Ukrainians need to “modernize”. The last time this “modernity” occurred in 2012. During this time the average salary in Ukraine increased two times, the result of millions of Ukrainians “retirement” have calculated the amount of pension below the subsistence minimum.

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)

According to the Ministry of social policy, the pension calculated taking into account the average salary 1917,91 hryvnia. 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.

Last year the Minister of social policy Andrei Reva announced the coming of “modernity” of pensions based on the new average wage. As the source told “Today” in the working group of the Ministry for the preparation of the “modernization”, the pension will increase based on the average salary 3764 UAH.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.

The coefficient of insurance will be reduced from 1.35 to 1. “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 senior researcher of the Institute of demography and social studies Lydia Tkachenko.

Why Ukraine needs pension reform

Uraintsy get some of the lowest pensions in Europe. The deficit of the Pension Fund (PF) for several years has grown almost twice. Last year retired Ukraine spent 255 billion UAH 142 billion deficit, which is compensated for by the state budget. This year the budget increased to 284 billion hryvnia, the deficit of $ 141 billion hryvnia. To increase the revenue part of the budget was due to the increase in the minimum wage two times from January 2017.


In the Cabinet plans to eliminate the deficit of the Pension Fund for six years – until 2024. “It (the situation in the pension system – ed.) those things we must change to build a new, high-quality, socially just pension system, which would, according to our calculations, to eliminate the Pension Fund deficit until 2024. This means that the pension system of Ukraine is stable,” – said Vladimir Groisman on the upcoming reform of the pension system.

The main problems of the pension system of Ukraine – low wages and a large shadow employment. The number of pensioners, as we have, throughout Europe, is increasing. Now for 10 working taxpayers accounted for almost 12 retirees. If the situation does not change in the foreseeable future, ten employees will contain 15 seniors, according to the Institute of demography. This is an excessive burden for the pension system of any country.