Rada passes pension reform increasing minimum pensionable service from 2018

The Verkhovna Rada of Ukraine has passed the bill on the pension reform, which increases a minimum pensionable service period from 15 to 25 years starting from January 1, 2018.

A total of 288 lawmakers voted for passing relevant bill No. 6614 on Tuesday, with 226 votes required, an Interfax-Ukraine correspondent reported.

The law of the pension reform envisages recalculation of pensions starting from October 1, 2017, using a single average salary indicator, which has been used to calculate pensions in 2017, in the amount of UAH 3,764, with a coefficient of a year of pensionable service being one (the current coefficient is 1.35).

The law envisages raising the maximum amount which falls under a payment of a single social contribution to 15 minimum wages (UAH 48,000 at the moment). At the same time the size of the single social contribution won't be changed.

When calculating pensions in 2018, the coefficient of pensionable service will be one, and the amount of average salary for the past two years will be used, while starting from 2019, the average wage will be calculated using the past three years of service.

It is also planned to start paying pensions to working pensioners in full from October 1, 2017.

Starting from January 1, 2018, those citizens who will have 25 years of pensionable service will be able to retire at the age of 60.

The minimum length of pensionable service will be increasing annually by one year, until it reaches 35 years in 2028.

Those citizens who will have 15 years of pensionable service by January 1, 2018, will be able to retire at 63. For the next 10 years, the minimum length of pensionable service will increase by one year annually.

Starting from 2018, those citizens who will have 15 or 16 years of pensionable service by January 1, 2019, will be able to retire at 65.

Those citizens who won't have 15 years of pensionable service will be assigned government social assistance upon reaching the age of 65.

Starting from January 1, 2028, people who will have 40 and more years of pensionable service will be able to get an old-age pension irrespective of their age.

The law envisages the introduction of a accumulative system of compulsory pension insurance starting from January 1, 2019.

Insured persons who have less than 10 years of pensionable service left by July 1, 2018 may refuse to take part in the accumulative system.

The Cabinet has been instructed to provide for the functioning of the accumulative system of pension insurance by July 1, 2018.

In 2019-2020, the indexation of pensions will be carried out under a separate resolution by the parliament.

Every year starting from 2021, the average salary will be revised by 50% of the salary growth for the previous three years and by 50% of the consumer price index.

In addition, it is proposed to get rid of long-service pension (except for artists), leaving a preferential retirement only for those who work in hazardous conditions, people with disabilities, mothers who raised five children and those disabled from childhood (at 50); participants in military actions (at 55 provided 22 years of pensionable service).

The maximum amount of pensions assigned on the basis of the laws on the State Service, on the Prosecutor's Office, on the status of people's deputy of Ukraine, on scientific and technical activities (including allowances), cannot exceed 10 times the subsistence minimum, established for persons who lost their ability to work.

Temporarily, until December 31, 2017, the maximum size of pensions (including allowances, apart from allowances for people who have special merits before their country) cannot exceed UAH 10,740.

The Verkhovna Rada ordered the Cabinet to prepare a separate bill on revising military pensions by November 1 and a separate bill on the introduction of a professional pension system within six months, as well as to insure the conduct on an audit at the Pension Fund.