Ukraine's Cabinet of Ministers seeks to initiate the introduction of the single average wage sum for accruing pensions of UAH 3,764.40, Ukrainian Prime Minister Volodymyr Groysman said at the presentation of the draft pension reform at a government meeting on Wednesday.

According to the presentation, the bill proposes that a new formula for accruing pensions is introduced from October 1, 2017 using the common approach for existing and new pensioners using average wage of UAH 3,764.40.

According to a posting on the website of the pension reform, the figure is used to accrue pensions awarded in 2017 (average wage for 2014, 2015 and 2016).

The prime minister said that earlier average wage that was taken into account for accruing pensions was from UAH 1,197.91 to UAH 3,764.40.

The obligatory upgrading of pensions is the integral part of the pension reform. The pensions will be recalculated in line with growth of average wage from which pension tax is paid.

The latest upgrade of pension was made in 2012. The average wage for 2007 (UAH 1,197.91) was used. Over the period it more than tripled. Two thirds of pensions even do not reach the subsistence rate.

"The review of the pensions proposed by the government would liquidate this misbalance," reads the posting.

The government proposes to cut the interest for the cost of one year of the pensionable service from 1.35% (in effect since 2008) to 1%.

According to the presentation, 1.35% has not been applied to all pensioners in full.

"The reduction of the figure would not worsen, but even improve the conditions for review of pensions," the government said.

The coefficient will be equal for those who receive pensions this year and for those pensioners whose pensions are reviewed from time to time.

According to the government, pensions will be reviewed for around 5.6 million of Ukrainians (a total of 11.9 million pensioners are in Ukraine).

Later the basic figure for calculating pensions will be automatically increased using the rate that will be at least the half of the pace of average wage growth in Ukraine. From January 1, 2018 minimum pension will be 40% of minimum wage.

From October 2017 the government proposed to annul the 15% decrease of pensions for working pensioners. Some 494,000 pensioners have reduced pensions out of 2.3 million working pensioners.

"The government proposes that those who work receive wages and pensions in full amount," reads the posting.