REUTERS
Ukrainian's Social Policy Minister Andriy Reva says the World Bank fully supports the draft pension reform prepared by the Ukrainian government and offers support in its adoption.
"I am pleased to note that the last version of the draft law [on pension reform] prepared by the members of the government takes into account our previous comments. We offer our full support in the process of its consideration and adoption. Let me congratulate your government on achieving this important goal. The draft law is a significant step forward in the efforts to reform the Ukrainian pension system in order to return it to a stable fiscal path, to ensure social justice and to strengthen incentives for involvement in the system. My colleagues and I are waiting for the continuation of our fruitful cooperation," Reva read out a letter from World Bank Director for Ukraine, Belarus and Moldova Satu Kahkonen at a government meeting on Wednesday, May 31.
The minister also said that the International Monetary Fund, another donor of Ukraine, would publish its position on the draft pension reform in the coming days.
As UNIAN reported, Ukraine's Cabinet of Ministers on May 17 approved a draft of pension reform and sent it to the National Reform Council under the President of Ukraine.
Read alsoUkraine's deputy PM: Pension reform concept needs to be finalizedAs 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.