Prime-minister Groysman presents pension reform, still to be approved by the IMF

UKRAINE - In Brief 17 May 2017 by Dmytro Boyarchuk
Today Prime-minister Volodymyr Groysman finally presented to public his proposal on pension reform. He suggested increasing years of service (before being vested in a pension) up to 25 years from 15 years previously (35 years by 2028). At the same time, retirement age was left unchanged at 60 years. Also the Cabinet envisaged incentives for longer employment and later retirement. In particular, if a person does not meet years of service requirement s/he will be eligible for pension only after reaching the age of 65. To make the proposal more friendly for the public, Groysman promised to ‘modernize’ pensions i.e. increase pensions for Ukrainians already from October. Unfortunately, in his presentation Prime-minister omitted macro-economic effect of pension reform just promising that Pension fund deficit will reduce with years. When presenting Groysman received an open question how the IMF treats his proposal. He did not respond. Prime-minister just said the proposal will be submitted to the National Reform Council for review. In my opinion, this means the IMF still has concerns on the concept most likely related to the promised ‘modernization’ of pensions. By the way, the IMF mission arrived to Kyiv yesterday and pension reform is seen as the main reason why the IMF officers decided to come from overseas.

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