There are more and more pensions, there are fewer and fewer pensioners. What to expect for Ukrainian elders

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• 1 Minimum pension in Ukraine in 2021: size and stages of increase 1.1 Increasing the minimum pension throughout 2021

Minimum pension in Ukraine in 2021: size and stages of increase

On January 1, a new state budget comes into force, which includes an increase in the minimum wage and the cost of living. The minimum pension is tied to these indicators, therefore, from January 1, this indicator also increased.

So, the minimum pension for pensioners who have reached the age of 65 and have a work experience of at least 30/35 years (women/men, respectively) is supposed to receive UAH 1,638 monthly. The minimum pension is 40% of the minimum wage.

UAH 173 billion will be allocated from the state budget for the Pension Fund.

As for plans to increase the minimum pension in 2021, this will happen only through indexation, as promised by the Verkhovna Rada Committee on Social Policy, since the country’s budget for the current year does not include an increase in the minimum wage.

Increase in the minimum pension throughout 2021

The first date for increasing the minimum pension is July 1. The minimum pension will be UAH 1,712, the second date will be December 1. Then Ukrainian pensioners will be able to receive at least 1,769 UAH per month.

Indexation will take place according to the formula 50% of inflation + 50% of the change in average salary over the past year.

Social pensions and disability supplements will be abolished in Ukraine

The Ukrainian government has announced the main points of the next stage of the so-called “pension reform” in the country. According to official information, as of January 1, 2021, hundreds of thousands of elderly Ukrainians who do not have minimum work experience, as well as entire categories of citizens receiving disability payments, will be deprived of financial support from the state. Officials claim that it is precisely such measures that will preserve “free funds” in the poor treasury. FAN correspondent found out what the new initiative of official Kiev entails .

The local branch of the Pension Fund notified Kiev resident Rimma Vladimirovna S. that December payments to her social bank account would be her last. They say that a 67-year-old woman does not have enough “length of service”, so she can no longer count on even the minimum amount of maintenance.

“I really lost 10 years of experience when I worked first in Poland, and then in Italy and Portugal,” the woman complained. “But could I have imagined that in my old age I would remain poor?”

Federal News Agency / Leonid Androsov

We are not talking about poverty, they told Rimma Vladimirovna at the state regional administration. They recommended, figuratively speaking, to “buy back the missing working years”: according to the current legislation of Ukraine, every citizen of retirement age has the right to pay for “gaps” in their work experience. The amount of payment, depending on the region, currently ranges from 10 thousand to 50 thousand hryvnia for each year of such a “gap” (approximately from 27 thousand to 140 thousand rubles). In response to the woman’s indignation, who stated that she personally did not have that kind of money, the administration employee retorted:

“The state also doesn’t have the money to support [all of you].”

As noted in the resolution of the Cabinet of Ministers of Ukraine number 1098, adopted at the end of 2021, for persons who did not have the required 15 years of experience at the time of retirement, a “social pension” (SP) in the amount of 900-1200 hryvnia was assigned. Today, official Kyiv decided to cancel the corresponding paragraph in this document.

“There are no additional funds [for the maintenance of this category of pensioners] in the budget,” stated Ukrainian Prime Minister Denis Shmygal .

Federal News Agency / Leonid Androsov

Analysts note that the system of accrual of “social pensions” in Ukraine is indeed temporary and should be abolished sooner or later.

“The joint venture expires on December 31 of this year, and the authorities do not want to extend it,” lawyer Vladimir Borovoy . — Special payments to disabled people who previously received a number of allowances for loss of ability to work will also go under the knife. It turns out that several hundred thousand people will have to get used to the new realities in Ukraine.”

This opinion is shared by the head of the Economic Discussion Club Oleg Pendzin .

“A person who has not earned enough experience risks being left without a livelihood and ultimately ending up on the street,” the expert told reporters in Kyiv. “And this is just the tip of the iceberg: given that many of our fellow citizens work without obtaining the appropriate documents, millions of Ukrainians will be deprived of their pensions in the foreseeable future.”

Federal News Agency / Leonid Androsov

At the same time, the Ukrainian authorities are desperately trying to “smooth out the rough edges” of the current situation. As the Ministry of Social Policy of Ukraine emphasized, in individual cases, senior citizens are entitled to “targeted financial assistance.” But here’s the thing: this assistance will amount to only 30% of the minimum pension (about 550 hryvnia) and will be provided after “carefully studying all the documents provided.” Rimma Vladimirovna predicts:

“Even the most frugal person in Ukraine can only live for two or three days on such a handout.”

“Let the poor old people be fed and supported by their relatives or, at worst, by volunteers,” one of the high-ranking Ukrainian officials noted on the basis of complete confidentiality.

There is nothing to add to what has been said.

Minimum pension: current news

The draft budget for 2021 approved the minimum pension amount - 1,638 hryvnia. It is planned to increase this amount throughout the year – in July and December. The increase in pension payments will not be significant - only 8%, which is equal to 131 hryvnia.

The minimum pension payment from July will be 1,712 hryvnia, from December – 1,769 hryvnia. The size of the minimum pension by the end of next year will be UAH 3,328, if funding is found to increase the cost of living and it increases to the actual level.

The growth of the cost of living will also be affected by the revision of payments to those pensioners who began receiving them before 2021. In this case, you will need to perform indexing. Such actions will entail additional costs.

The Segodnya publication also writes that a draft law has been registered in the Verkhovna Rada, which will allow increasing the minimum cost of living by almost 2 times in 2021 - to 4,500 hryvnia.

Minimum pension for people with long work experience

From January 1, the minimum pension increases by UAH 172 to UAH 1,669 for persons over 65 years of age with at least 30 years of work experience for women and 35 years for men.

The increase in pensions will affect about 2 million pensioners.

The law stipulates that the pension amount for such persons cannot be lower than 40% of the minimum wage. Since the minimum wage level increases to UAH 4,173 from January 1, this category of people will have a recalculation and the pension amount will increase by UAH 172.

The cost of living for persons who have lost their ability to work, from December 1, 2021, was increased by 62 UAH to 1,497 UAH. From July 1, the minimum pension was also increased by 62 UAH – to 1435 UAH. Thus, the minimum pension in 2021 increased by 9% (by 124 UAH) - from 1373 UAH to 1497 UAH.

According to the State Budget Law, in 2021 the pension will increase by 9%. The law establishes the following cost of living for persons who have lost their ability to work: from January 1, 2021 - 1497 UAH, from July 1 - 1564 UAH, from December 1 - 1638 UAH.

How pensions will be recalculated in 2021

The Ministry of Social Policy has published an information calendar with a schedule for increasing pensions in Ukraine for the next year. According to the schedule, payments will increase as follows:

From January 1, payments for pensioners over the age of 65 with 30 years (women) and 35 years (men) of insurance experience will increase from 2100 to 2400 hryvnia. This increase is due to an increase in the minimum wage from 5,000 to 6,000 hryvnia.

From March 1, pensions will be indexed. It is planned at the level of 11%.

For working pensioners, pensions will be automatically recalculated taking into account the size of their salary and length of service.

From July 1, pensions for pensioners over 65 years of age with 30 years of insurance (for women) and 35 years (for men) will increase from 2,400 to 2,600 hryvnia. This is due to an increase in the minimum wage to 6,500 hryvnia.

In July, monthly additional payments of up to 400 hryvnia will be introduced for pensioners in the age category of 75-80 years. For them, the minimum pension level is set at 2,500 hryvnia if they have insurance experience (minimum 20 years for women and 25 years for men).

Upon reaching 80 years of age, the amount of the supplement increases to 500 hryvnia, and the minimum pension - to 2600 hryvnia (if you have insurance experience: at least 20 years for women and 25 years for men). For single pensioners in this category, the minimum pension will increase to 3,342 hryvnia (including care assistance).

Also planned for July is an increase in the pension minimum to 1854 hryvnia and pension supplements:

• for excess length of service;
• war participants and disabled people;
• liquidators of the Chernobyl accident;
• for special merits, etc.

The Cabinet of Ministers approved and submitted to the Verkhovna Rada a number of bills that propose changing the approach to calculating the cost of living. Today a lot of everything is tied to it: social payments, fines, fees, payments and penalties. According to the government’s proposals, they want to use the minimum wage only to determine basic social guarantees - for example, the minimum wage, the minimum old-age pension, social assistance for low-income families, and so on.

At the same time, when calculating the amount of so-called non-basic social payments, a certain basic value will be used. This applies, for example, to bonuses, promotions, additional pensions, pensions for special merits, and so on.

In total, as the government explains, today in Ukraine there are almost 180 norms that provide for the use of a living wage in criminal, economic and administrative legislation. Which is twice the number of such norms that regulate issues of social payments - 79. In this regard, with an increase in the cost of living, the amount of not only social guarantees, but also other payments automatically increases.

According to the legislative formulation, the subsistence minimum is a cost estimate of the consumer basket, which includes minimum sets of food and non-food goods and services necessary to preserve human health and life. According to the law on the state budget 2021, the total cost of living as of January 1, 2021 is 2189 hryvnia, from July 1 - 2294 hryvnia, from December 1 - 2393 hryvnia.

New pension recalculation system from 2020

For those whose salary is twice the average and have reached 35 years of experience, about 600 UAH will be added. Experts gave an example of calculating a pension for an employee with an average salary who retired in 2018.

A Ukrainian with an average salary and 35 years of experience will receive a pension of about 1.8 thousand UAH

During the calculation, the average salary for two years (5.4 thousand UAH) is multiplied by length of service, 1% and the earnings coefficient (with an average salary it is equal to one).

When recalculating, Pension Fund employees will increase the average salary of 5.4 thousand by 50% of average inflation and 50% of salary growth for three years. For example, with inflation in Ukraine at 10%, the average increase in wages will reach 18%. In this case, the salary in the formula will increase by 14% (10%/2 + 18%/2) – up to 6.1 thousand UAH. And the total amount of the pension after recalculation will be 2.1 thousand UAH. Thus, the increase will be about 300 UAH. For comparison, in 2021, pension increases in Ukraine occurred twice, and in both cases by approximately 60 UAH.

In addition, if a pensioner who retired according to the same rules (in 2021 with 35 years of experience) earned twice the average salary, at the moment his pension will be an amount of 3.7 thousand UAH, and after recalculation - 4.3 thousand UAH So, the increase will be 600 UAH.

What should those who do not have enough experience do? Very simple. Ukrainians now have the opportunity to purchase the missing years, although not more than 5 years. Each additional year is valued at UAH 16,896.

Why is it necessary to modernize the minimum pension in Ukraine?

Many pensioners are absolutely lost in numbers, but what is the minimum pension in Ukraine now interests everyone, because the quality of their life depends on it. Before the adoption of the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Concerning Increasing Pensions,” the following picture could be observed:

• The miner worked for 46 years and retired in 2008. He was awarded a 3,300 UAH pension.
• The miner worked for 46 years, but retired in 2021. His pension was 8,400 UAH.

When calculating their pensions, the following data was used:

• salary;
• experience;
• average salary in Ukraine.

The average salary is growing, newly minted pensioners receive pensions tied to them, and those who retired earlier only dream of a promotion.

Despite the fact that the size of the pension is limited by law, this figure will be individual for each pensioner.

According to the pension reform, the new calculation algorithm is as follows:

P = Zз × Kз × Kc

Where:

P – pension expressed in hryvnias;

Zз – average monthly salary in Ukraine for the last 3 calendar years (with the exception of 2021 – taken for 2 years 2016 and 2017);

Kz – wage coefficient (the ratio between the average payment in the country and the one that the pensioner received at that time. So, if, for example, the salary for the selected period was twice the national average, then the wage coefficient will be equal to 2, if 50% – 1.5);

Kc – coefficient of insurance experience, is defined as a multiplier of the length of years of work experience by the value of the assessment of the 1st year of insurance experience, which from January 1, 2021 is 1 (before that it was 1.35).

The calculation of each value, depending on the minimum salary, is performed individually. The pension depends on each indicator.

The legislation establishes the procedure for calculating the coefficient of experience of contributions to the Pension Fund of Ukraine - Kc. The formula used for calculation is:

Kc = (Cm × Bc)/(100% × 12)

Where:

Cm – the total number of calendar months during which contributions to the fund were made;

Bc – assessment of the insurance period for 12 months (must be expressed as a percentage). During the period of participation in the compulsory state pension insurance system, the value of the assessment of the 1st year of insurance experience is equal to 1%.

In European countries, the average pension is about 40% of the average salary, in some countries it even reaches 60%. But in Ukraine, according to European standards, only utility prices are rising. While the average pension (2645 UAH) is only 33% of the average salary (8977 UAH). The maximum this figure was recorded in 2009 and was equal to 49%. Socio-economic analysts argue that a drop in the rate to 20% or below is a gross violation of human rights.

In this situation, the way out of the situation is profitable loans for pensioners, which are issued by microcredit organizations. Minimum requirements, a loyal attitude towards people of advanced age, the first loan at 0% - these are the conditions offered by microfinance organizations.

What is the minimum payment miners can expect?

The latest increase also affected miners' pensions; the minimum payment was increased by 420 hryvnia and is equal to 4356 hryvnia.

Minimum pension for people with disabilities

People who have encountered difficulties in life are interested in what size of the minimum pension in Ukraine is provided for disabled people of the 1st, 2nd, 3rd groups. The amount of payment depends mainly on the type of disability and is calculated on the amount of the old-age pension:

• 1st group – 100% of the pension;
• 2nd group – 90%;
• 3rd group – 50%.

It is worth noting that people with disabilities have the right to receive social benefits from the state. Therefore, there is no set figure; all accruals are made individually.

For disabled war veterans

For war invalids of the 1st group, the minimum pension payment is 128 UAH more (4266.45 UAH), 2nd group - by 114 UAH (3817.35 UAH), 3rd group - by 101 UAH (3368.25 UAH).

Participants in combat operations also increased the minimum pension by 74 UAH, the amount of the pension is 2470.05 UAH.

Minimum pension without work experience in Ukraine

According to the law, every person must have at least 15 years of insurance experience to receive a pension. If such experience is available, then the Ukrainian can count on a minimum pension; if not, then the only option left is a social pension in Ukraine.

Despite the years of work, or unofficial employment in the past, many people are faced with the fact that they do not have even the minimum 15 years of insurance experience. What to do in this case:

• pick up the papers and look for evidence of work activity (relevant for those whose work records have been lost);
• “rework” before the required deadline;
• buy years of experience.

Social pensions in Ukraine: terms of payment, size, registration procedure

What the size of such a pension will be is the second question. But what should those who do not even have such experience, foreigners and stateless persons living in Ukraine, do? Will they really not receive even the minimum benefit from the state? It turns out they will. The Law of Ukraine “On state social assistance to persons who are not entitled to a pension and to disabled people” provides for the payment of social assistance or, as it is also called, a social pension to such persons. Prostopravo.com.ua found out who is entitled to a social pension in Ukraine, in what amount, and what is needed to apply for it.

Who is entitled to a social pension in Ukraine

The procedure for the appointment and payment of state social assistance to persons who are not entitled to a pension and the disabled, as well as state social assistance for care (hereinafter referred to as the Procedure) was approved by Resolution of the Cabinet of Ministers of Ukraine dated April 2, 2005 No. 261.

In accordance with the Procedure, the following have the right to state social assistance:

1)

persons who have reached the age of 63 and do not have the right to a pension according to the law or are recognized as disabled in the prescribed manner. Before reaching the specified age, persons not entitled to a pension include women born in 1958 and older after reaching this age:

• 58 years old - born before September 30, 1953 inclusive;
• 58 years 6 months - born from October 1, 1953 to March 31, 1954;
• 59 years old - born from April 1, 1954 to September 30, 1954;
• 59 years 6 months - born from October 1, 1954 to March 31, 1955;
• 60 years old - born from April 1, 1955 to September 30, 1955;
• 60 years 6 months - born from October 1, 1955 to March 31, 1956;
• 61 years old - born from April 1, 1956 to September 30, 1956;
• 61 years 6 months - born from October 1, 1956 to March 31, 1957;
• 62 years old - born from April 1, 1957 to September 30, 1957;
• 62 years 6 months - born from October 1, 1957 to March 31, 1958;
• 63 years old - born from April 1, 1958 to December 31, 1958;

2)

do not receive a pension or social benefits assigned to compensate for damage caused by injury at work, in accordance with the Law of Ukraine “On compulsory state social insurance against industrial accidents and occupational diseases resulting in loss of ability to work,” and assistance that is assigned in accordance with the Law of Ukraine “On State Social Assistance to Persons with Disabilities from Childhood and Disabled Children”;

3)

low-income persons (except for disabled people of group I).
Low-income people include persons whose average monthly total income for the last 6 calendar months or two quarters preceding the month of applying for a pension does not exceed the subsistence level for persons who have lost their ability to work, i.e. 844 hryvnia as of July 19, 2012.

4)

disabled people of group I, whose average monthly total income for the last six calendar months or two quarters preceding the month of applying for benefits does not exceed 115 percent of the subsistence level for persons who have lost their ability to work.
Persons receiving a disability pension and state benefits for disabled people since childhood have the right to switch to a social pension.

State social assistance is paid to both citizens of Ukraine and stateless persons, foreigners permanently residing in Ukraine, and refugees.

Social pension amount

Social assistance is established based on the cost of living for persons who have lost their ability to work, in the following amount:

• 100 percent - disabled people of group I, women who have been awarded the title “Mother Heroine”;
• 80 percent - disabled people of group II;
• 60 percent - disabled people of group III;
• 50 percent - to clergy, clergy and persons who, for at least ten years before the entry into force of the Law of Ukraine “On Freedom of Conscience and Religious Organizations,” held elective or appointed positions in religious organizations officially recognized in Ukraine and legalized in accordance with the legislation of Ukraine, in the presence of archival documents of relevant government bodies and religious organizations or testimony of witnesses confirming the fact of such work;
• 30 percent for everyone else.

To determine the amount of social assistance, the minimum subsistence level for persons who have lost their ability to work, established on the date of application for assistance by law for the corresponding year, is applied. In the event of an increase in the cost of living, recalculation of social assistance is carried out from the date from which the new size of the cost of living is established.

The procedure for applying and assigning social assistance

Social assistance is assigned by the departments of labor and social protection of the population of districts, districts in the cities. Kyiv and Sevastopol state administrations, structural divisions for labor and social protection of the population of executive bodies of city, district councils in cities (in other words, labor and social protection bodies).

To assign social assistance, you must contact the labor and social protection authorities at your place of residence and provide the following documents:

• application in the form approved by order of the Ministry of Labor;
• passport;
• work book;
• certificate of assignment of TIN;
• declaration of income and property (filled out on the basis of income certificates for each family member) for the last six calendar months or two quarters preceding the month of application for benefits, in the form approved by Order of the Ministry of Labor dated July 22, 2003 No. 204;
• a copy of the decision to establish guardianship (if the person is declared legally incompetent);
• a copy of a refugee certificate or temporary residence permit;
• a certificate of family composition issued by the authorized body at the place of residence, including the local government body.

Homeless persons, instead of a certificate of family composition, submit a certificate of residence or place of stay, which is issued by the homeless registration center where they are registered, or by a social protection institution for the homeless, where they are provided with temporary shelter.

Labor and social protection authorities, if necessary, add to the application an extract from the inspection report received by them from the medical and social expert commission (MSEC).

In case of applying for the appointment of social assistance instead of a disability pension, the labor and social protection authorities attach to the application a certificate requested from the authorities that assign the pension - a certificate of termination of payment of a previously assigned disability pension and an extract from the MSEC inspection report.

An application for a social pension must be considered no later than 10 days from the date of its receipt with all the necessary documents.

Social assistance is assigned from the day you apply for help. If an application for the appointment of appropriate assistance with all the necessary documents is sent by mail, the day of application is considered to be the date on the postmark from the place where the application was sent. The document confirming the fact of the appointment of assistance is a certificate issued by the body that assigned this assistance.

If the application for social assistance took place no later than three months from the date of reaching the age required for the assignment of assistance, the benefit is assigned from the day of reaching this age, or from the day the MSEC recognizes the person applying as disabled.

If not all necessary documents are attached to the application for social assistance, the applicant is informed which documents need to be added. If the remaining documents are submitted no later than three months from the date of sending the notification of the need to submit them, the day of application is considered the day the application for social assistance was accepted or sent.

Social assistance is assigned for life to persons who have reached a specified age, and to disabled people - for the entire period of disability established by MSEC. In the event of a change in the disability group, social assistance in a new amount is assigned from the day the disability group is changed, if such a change leads to an increase in its amount, and from the month following the one in which the new disability group is established, in the case of a decrease in the amount of the benefit. The recalculation of the amount of social assistance in connection with a change in the disability group is carried out by labor and social protection authorities on the basis of an extract from the inspection report at MSEC without the recipient filing an application. Social assistance is recalculated in the same manner if a person is recognized as disabled during the period of receipt.

Ekaterina Gutgarts

Improvements or “improvements” in the calculation of minimum pensions

For more than a decade, discussions have been ongoing about the creation of a three-tier funded system. The principle of operation is clearly visible in the example of a sandwich, which consists of bread, cheese and sausage:

1. Bread is the minimum level that a country must provide.
2. Cheese – monthly deductions from a citizen’s income.
3. Sausage – personal savings that are transferred to non-state funds. Ukrainian pensioners have a sandwich consisting of just bread.

The problem should be solved by a bill on the introduction of a savings system, according to which every Ukrainian will contribute a certain amount to his personal account for 35 years. The introduction of this system has been delayed until January 1, 2021. It so happened that even after all the improvements, the minimum pension payment in the country, relative to the dollar exchange rate, has almost halved over the past 10 years.

Data for the period 2011 – 2021

The situation is aggravated by the aging of the nation. So for 12 million working population there are about 10 million pensioners.

Wages in envelopes do not improve the situation either. Not only can the employee not count on a decent payment upon retirement, but also the contributions to the pension fund are minimal.

The legislation is quite confusing and the average Ukrainian sometimes cannot calculate the minimum that he can expect from the state. And the calculation of pensions depends on a number of indicators. But experts advise that when applying for a pension, indicate not the year when you had the highest salary, but the one when it was the highest compared to others in the country.

It is expected that over time, special programs will be developed that will allow you to independently calculate your pension.

Comparison of length of service, retirement age

The retirement age in neighboring countries for 2021 is different:

1. In the Russian Federation: for men – 60.5, for women – 55.5 years.
2. In Ukraine: length of service over 26 years - 60 years, length of service 16-26 years - 65 years.

The indicators for the minimum (for registration of pension provision) length of service in 2021 also differ:

1. In Russia: 10 years.
2. In Ukraine: 26 years (from 2028 – 35 years).

The average life expectancy also varies:

1. In the Russian Federation: for pensioners – 67.5 years, for pensioners – 77.4.
2. In Ukraine: for pensioners – 65.2 years, for pensioners – 75.5.

Compared to Russia, its western neighbor has a more complex situation with pension innovations.