In the Parliament approved an important change in the pension reform: how and when to change the life of Ukrainians

Profile Committee of the Parliament approved the draft pension reform, which the Cabinet registered under the title “On introducing amendments to legislative acts regarding the improvement of pensions”. However, in the document we are talking not only about higher pay, but also about the tightening of conditions for retirement. One of the key innovations that made the parliamentarians in several years Ukraine plans to start the cumulative level of the system. For Ukrainians, this means that at retirement you will receive two pensions.

That changed

“The Verkhovna Rada Committee on social policy, employment and pensions approved the bill No. 6614 on pension reform for the second reading in Parliament. For a decision voted by five of the seven members of the Committee. It is based on the government’s proposals”, – said the press service of the Ministry of social policy.

On his page in the social network’s Vice-Prime Minister Pavlo Rozenko said, the Committee in addition to proposals of the Cabinet has approved the amendment according to which in 2019, the year must earn a cumulative pension system. That is, the portion of the salaries of Ukrainians will go to the Pension Fund (PF) on pensions (jointly and severally), and the second part on personal accounts (cumulative level). As a result, Ukrainians will be able to receive two pensions from two levels of the system. This change will not affect current pensioners, but may significantly increase future pension still working Ukrainians.

Before 2019, the start a cumulative level will not succeed. First, it needs to develop a number of legislative acts, and second, it’s still not clear where to invest savings. Opinions about when you need to enter a cumulative level, the Parliament dispersed. So, 59 MPs have registered an alternative document, according to which a cumulative level must earn in the next year.

Alternative if the bill is adopted, all Ukrainians under the age of 35 years will be obliged to save for retirement. Those who are older will be able to participate in the cumulative level at will. Money will accumulate in private pension funds. Every Ukrainian will be able to choose the Fund yourself. “Insured person for participation in the accumulative pension insurance system, choose non-state pension funds in which they wish to form their mandatory retirement savings. At the request of a person, it may at any time to move to another non-state pension Fund”, – the document says.

The participation in the solidarity system was not canceled. That is, wages 22% will go to the joint level, and 2% into a private pension Fund. Each year, the amount you need to pay in the private Foundation will increase by one percentage point until it reaches 7% of salary.

Photo: archive

Social policy Minister confident that the parliamentarians will accept the governmental reform project, approved at a meeting of the national Council of reforms under the leadership of the President. And now, notes the expert in the sphere of pension provision Taras Kozak, it is important where to invest the savings of Ukrainians. In private funds, as proposed in the alternative draft law, securities, banks to special accounts, etc. experts believe that Ukrainians have the right to choose where to store the money.

“Unfortunately, some officials do not want to give people the choice, and wants to “shove” all the money in the state savings Fund. Where those same officials will be able to steer the money of future pensioners. In the interest of their pockets.
In General, we are only at the beginning of the battles around the future design of the pension system,” – said Taras Kozak.

Senior researcher of the Institute of demography and social studies Lydia Tkachenko also believes that the government pension Fund – not the best option. “If the second step is to make public, as prescribed in the existing legislation, it makes no sense. No wonder the IMF is strongly against such a second level. If it is public, then all the problems of the solidarity system will go to the second level. The state is the same, the quality of controlling the same, the money’s the same. If you put money on Deposit in state banks or in government securities, as suggested, …it could all lead to an increase in domestic public debt,” says Lydia Tkachenko.

What else was approved by the relevant Committee of Parliament

Future pensions will be at least 25% lower. Changing the formula for calculating pensions. Now each year “costs” of 1.35% of the estimated income and after the reform will cost 1%. That is, the coefficient estimates of experience are reduced by 25%, proportionately reduced pension. This increases the requirements on experience. Will increase the rate of experience, and reduced co-pays for swarnamalaya experience. In the government explain: used to pay social contribution in the amount of 37% of salary, then you spent a year rate of 1.35% of the estimated earnings, and now, when the contribution was reduced to 22%, you need to reduce the assessment ratio experience.

The “old” pension will increase by an average of 300 hryvnia. 5.6 million pensioners will fall under “modernity”. Their payment will count with respect to the actual size of the average country salary for three years. It is important that take into account the salary according to the Pension Fund, that is, one with which to pay fees. At the moment the average wage according to the state statistics – more than 7000 hryvnia, and the average for three years, salary is according to the PF – a total of 3764 the hryvnia. After recalculation of pensions will grow from 50 to more than 1,000 hryvnia.

Photo: archive

By the way, also, the bill contains a mechanism for the annual increase of pensions by 50% from the level of growth of the average annual salary for the last three years and at least 50% of the level of inflation.

Flexible corridor in the retirement age. To receive a pension at age 60 in 2018 will need to have at least 25 years of insurance experience. Every year the size of the required experience will increase by 12 months, while this figure will not reach 35 years. As stated in the presentation of the Cabinet, this will mean that in 2028 “in time” will be able to retire, only 55% of the total number of 60-year-old Ukrainian. If in 2018, come retirement age, but there are more than 15 but less than 25 years of service at retirement, you can only claim at age 63. If next year will be 60 years and going exactly 14 years of insurance experience in retirement can go at 65. The Ukrainians, who have not got this service at retirement do not have rights. Instead, they are entitled to social assistance.

However, as recently stated by the Minister sotspolitiki Andrey Reva, those who have accumulated 40 years of service can retire at any time.