Pension reform approved

UKRAINE - In Brief 03 Oct 2017 by Dmytro Boyarchuk

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Ukrainian parliament voted in the bill on pension reform into the law. The reform presumes increase in years of service (before being vested in a pension) up to 25 years from 15 years previously (35 years by 2028). Nominal retirement age was left unchanged at 60 years. The law envisages immediate indexation of pensions (so called modernization). For people with insufficient number of years in service (less than 25 years) the law presumes retirement age at 63 years (retirement age will increase every year by one year). From 2019 retirement age will be 65 years for people with 16 years in service: every year this pension plan will shift for one more year. By 2028 retirement age will be 65 years for people with years in service less than 24 years, 63 years for people with years in service less than 34 years and 60 years with years in services 35 years. For those pensioners who reached 65 years but did not work even 15 years the government will provide social assistance. Also the law talks about second tier pension system (mandatory savings) from 2019. The reform also presumes return of full pensions for working pensioners (previously pensioners lost part of his/ her pension payments in case of employment). This law was among the key requirements of the IMF. However, Ukraine’s representative to the IMF, Vladyslav Rashkovan, already commented on Facebook that he has concerns on this version of pension reform. He mentioned second tier of pension system (mandatory savings) and the issue of counting years of service for students which were among the points the IMF mentioned previously. Need to wait for official feedback from the IMF but I think those concerns on second tier in...