REUTERS
The Verkhovna Rada of Ukraine has passed a bill on pension reform, which introduces requirements for the minimum pension insurance record for retirement and provides for an increase in retirement benefits to be paid to 9 million pensioners in the amount of UAH 200 to UAH 1,000 each per month starting from October.
Some 288 lawmakers voted for the adoption of bill No. 6614 "On Amending Certain Legislative Acts of Ukraine Regarding Increasing Pensions" with the required minimum being 226 votes, an UNIAN correspondent reported.
The law provides for the introduction of automatic indexation (recalculation) of pensions every year to counter inflation: taking into account the financial capabilities of the pay-as-you-go system, but not less than 50% of the growth of average monthly wages for three years and by 50% of the consumer price index.
The law does not provide for raising the retirement age, but introduces requirements for the duration of the pension insurance period. So, a person will need to have at least 25 years of pensionable service to retire at the age of 60, whereas retirement at 63 will be possible with the pension insurance 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.
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The reform also abolishes special long-service pensions paid to state officials, judges, scientists and other groups, introducing a single formula for calculating the amount of their retirement benefits.
In addition, employees of the education, health, social sectors, as well as prosecutors and other workers, who were allowed to retire early, i.e. from five to ten years before the retirement age, will no longer have this benefit. The early retirement norm will be applicable only to military servicemen and members of law enforcement agencies.
The size of the pension of each citizen of Ukraine, according to the law, will be calculated according to the formula "The Size of Pensions = AW3 × ICW × CIR," where AW3 is the average wage in Ukraine for three years before applying for a pension benefit, ICW is the individual coefficient of wages (the ratio of the paid wage to the average wage), and CIR is the pension insurance record coefficient, which is a benefit multiplier for the number of years of service by the estimated size of one year of the insurance record.
The basic average wage for calculating pensions will be UAH 3,765, or US$141, which is almost three times higher than the pension before the reform (UAH 1,197, or US$44.8). The pension insurance record coefficient was reduced from 1.35 to 1.
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Also, the law cancelled a 15% reduction in pensions for 500,000 working pensioners.
As UNIAN reported, the Verkhovna Rada on July 13 adopted a draft law on pension reform in the first reading. The International Monetary Fund earlier stated that the adoption of the pension reform is critical for new disbursements to Ukraine.