Ukraine's deputy PM: Pension reform concept needs to be finalized

"The pension reform was presented to the public 1.5 weeks ago. It's obvious that this version of the pension reform has received a lot of feedback, including from ministers, lawmakers, experts, and specialists. I think the draft pension reform needs substantial finalization," he said.

Rozenko noted that a large number of experts, in particular representatives of employers and trade unions, who had not yet seen the pension reform concept, should be involved in the discussion.

In his words, the pension reform should not only amend the pay-as-you-go pension system but also incorporate financial defined contributions.

"I would like to see the future of the pension system, because, in my opinion, it is not enough to only conserve and regulate the pay-as-you-go pension scheme," he said.

Read alsoUkraine's finance minister: No more money from IMF without pension reformAs UNIAN reported, Ukraine's Cabinet of Ministers approved a draft of pension reform and sent it to the National Reform Council under the President of Ukraine.

As part of the pension reform, the Ukrainian government plans to raise pensions by the sum varying from UAH 200 to UAH 1,000 as of October 1, which, according to preliminary estimates, will involve some 5.6 million Ukrainians. The government will also cancel taxation of working pensioners' old-age benefits.

The pension reform does not provide for raising the retirement age, at the same time it introduces requirements for the minimum pension insurance record. So, a person will need to have at least 25 years of pensionable service to retire at age 60, whereas retirement at 63 will be possible with the record from 15 to 25 years, and at 65 if it is less than 15 years. At the same time, people without the pension insurance record will be eligible to apply for social assistance when they reach 63. The size of assistance will be determined based on the income level of the pensioner's family.

The minimum pension insurance record will be extended by one year every 12 months until 2028. Thus, starting from 2028, a person needs to have 35 years of pensionable service to retire at 60. At the same time, the government version of the pension reform provides for the possibility of "buying" up to five years of the pensionable service. So, if a person had to buy the pension insurance record now, under these rules, he or she would have to pay UAH 16,896, or about US$641, for the first year.

The reform also abolishes special long-service pensions paid to state officials, introducing a single formula for calculating the amount of pensions, which is pegged to the amount of contributions paid by pensioners to the Pension Fund during their life.

The International Monetary Fund said earlier that Ukraine could no longer delay the introduction of comprehensive pension reform, which foresees, among other things, an increase in the effective retirement age.