Pensions in Ukraine: how many pensioners are working and what will happen to payments in 2025
17 October 2024 21:48
As of 1 October 2024, 2.8 million people out of 10.3 million pensioners in Ukraine continued to work. This is evidenced by statistics released by the Pension Fund of Ukraine, "Komersant Ukrainian" reports.
The average pension is UAH 5,851.86. For working pensioners, it is slightly higher – UAH 6257.96. The majority of pensioners – 61.73% – receive payments not exceeding UAH 5,000.
In this regard, Nina Yuzhanina, Member of Parliament of Ukraine, in a post on her Telegram channel , emphasised that the draft state budget for 2025 (Article 40) provides for an increase in the maximum amount of the base for the calculation of the single contribution for obligatory state social insurance to 20 minimum wages (UAH 160,000), compared to 15 minimum wages today (UAH 120,000).
The additional amount of the unified social contribution will be UAH 8,800 per month, with the pension calculation system remaining unchanged.
Pensions in 2025: how much, who will receive them and how they will be indexed
Ukraine is continuing the pension reform that was introduced seven years ago. Every year, the requirements for the insurance period for retirement in different age groups are increasing. In 2024, to retire at the age of 60, you will need to have at least 31 years of service. By 2025, this requirement will increase to 32 years. In the following years, this requirement will increase further. For retirement at 63 or 65, there are also specific service requirements, which will also increase every year.
If a person does not have the required length of service, they can buy it. An agreement on voluntary payment of pension insurance contributions can be concluded with the tax authorities, and this will be taken into account as insurance experience. You can also conclude an agreement on a one-time payment of contributions for the previous period. The monthly minimum contribution under such an agreement is equal to the minimum unified social tax (UST).
Pensions are indexed annually for non-working pensioners, and recalculated for working pensioners. Indexation takes place once a year, based on the average salary and consumer price growth. The pensions of working pensioners are recalculated automatically, increasing the pensionable service ratio for each additional 24 months.
The draft budget for 2025 provides for indexation and recalculation of pensions. The government will determine the terms and dates of these procedures. Nevertheless, the Prime Minister has promised that resources will be allocated for pension indexation. The Pension Fund’s budget for the next year is also expected to be deficit-free, which gives rise to expectations of pension increases.
Thus, Ukraine continues to implement a parametric pension reform, which gradually increases the length of service required for retirement. If you do not have enough years of service, you can buy it through an agreement with the tax authorities. Pensions are indexed and recalculated annually, taking into account the growth of average wages and consumer prices. The government has already announced plans to index pensions, and resources will be allocated for this purpose.
In Ukraine, it is unclear how much pensions will be indexed until official figures are approved. The Cabinet of Ministers plans to publish a decree on indexation and recalculation only at the end of winter. However, based on the available indicators, it is possible to preliminarily calculate the percentage of indexation. For example, the consumer price index for September is 6.5%, and the difference between average salaries for different periods is 8.4%. Thus, at the moment there are grounds for indexation by 7.45%.
For working pensioners, an automatic recalculation will also be carried out, but they will receive it only in the summer, as the latest data on unified social contribution contributions, which are submitted within 40 days after the end of the quarter, must be taken into account. At the same time, the Minister of the Pension Fund of Ukraine reminds of the planned reform of the pension system, which is to be implemented from July 2025. It is expected to change the principle of pension calculation and revise benefits for those already receiving pensions. Instead of salary and length of service coefficients, the plan is to introduce a system of points that will be awarded based on the insurance premium for each month of work.
The legislation also introduces the concept of a minimum pension, which depends on age and length of service, as well as on the status of the pensioner (working or not working). The Cabinet of Ministers can set the amount of the minimum pension, as well as introduce additional payments for higher rates. For example, non-working pensioners aged 65 with a certain length of service should receive a supplement of up to UAH 3,370. Pensioners who are internally displaced and pensioners temporarily residing abroad will also have to undergo annual identification.
The identification requirement was suspended during the quarantine, but was reinstated more than a year ago. Pensioners who are internally displaced need to undergo physical identification every six months, and pensioners temporarily residing abroad need to be identified in person, via video conference, through an electronic cabinet or with the help of a diplomatic mission. This requirement was introduced this year. For the first time, such identification must be completed by the end of this year.
