Overwhelming destitution: What Ukrainian pensioners should expect in 2021?

Author : Serhiy Korobkin

Source : 112 Ukraine

According to the statistics of the Pension Fund, Ukraine would lose over 200,000 of its pensioners! As of January 1, 2020, there were 11.3 million of them, and on January 1, 2021, there would 11.1 million
14:34, 29 January 2021

pensions in Ukraine
Open source

How do these old people disappear? There can be several reasons for such depressing statistics. We would not take into account those elderly people who left Ukraine for permanent residence in other countries.

We should remember that fewer new pensioners appear than before. This is due to the increase in the retirement age for women from 55 to 60 years, and the fact that since 2017 the amount of seniority required for the appointment of a pension has sharply increased. Until 2018, 15 years of work experience was enough to retire at 60. Since 2018, this bar has been immediately raised to 25, and it continues to grow. If a person turns 60 this year, but he does not have at least 28 years of experience, then the pension will not be assigned. This can only be done at 63 or even 65 years, depending on the length of service and the year of retirement. From 2028, at least 35 years of experience will be required to retire at 60. However, by that time the legislation may change again, and the retirement age may rise even more. One way or another, due to the described innovations, many citizens who reached retirement age after 2018 were unable to apply for a pension.

Related: Ukraine's govt to reduce pensions to 65 USD?

Despite a significant reduction in pensioners, the Pension Fund deficit is still growing. Even a small increase in pensions requires additional millions of dollars from the state budget. Over the year, the average pension in Ukraine has grown by almost 14%. In January 2020, its size was 110 USD, and on January 1 of this year, it increased to 124 USD. Thus, the monthly need for pension payments is still increasing. In January last year, this required 1,3 billion USD, and in January of this year already – 1,5 billion USD. The Pension Fund reported that their budget deficit for 2020 amounted to 460 million USD. It had only 9,9 billion USD, and expenses amounted to 17 million USD. The missing funds are covered by the state budget. Thus, the real deficit amounted to almost 7,1 billion USD.

Despite the periodic indexation, pensioners are still unhappy. The average pension for the year increased by 15 USD. Someone get an additional 35 USD, and someone was left without a raise at all. The pension of 77.3% or of 8.6 million pensioners is lower than 140 USD. Of these, 1.8 million citizens receive a pension of less than 70 USD (this is more than 16% of the total number of pensioners). For comparison, approximately 20% of pensioners receive a pension in the amount of 140 to 360 USD. About 3% of pensioners (336,000 Ukrainians) receive more than 360 USD monthly.

Related: ECHR sides with Ukraine in case of pension payments to occupied territories

Even the Ministry of Social Policy itself admits that the real subsistence minimum should be about 140 USD. But the state budget for 2021 approved that a pensioner must survive on 63 USD per month. This is currently the subsistence minimum established for persons who have lost the ability to work. It is interesting that for able-bodied citizens the living wage is 2270 UAH, for children under 6 years old – 68 USD, for children under 18 years old – 85 USD. That is, it is officially believed that pensioners need less for life than everyone else.

From July and December, there will be a traditional increase in the cost of living and the minimum pension to 66 USD and 68 USD, respectively. Among other things, the Ministry of Social Policy proposes to resume the indexation of pensions for military personnel, civil servants, scientists, and some other categories of citizens. But whether the relevant bills will be adopted in the Verkhovna Rada, and where they will take the money for this, remains a mystery. Opposition deputies registered similar projects in the Verkhovna Rada back in 2019 but never came to their consideration.

Related: UN urges to de-link pensions for Donbas citizens from IDPs status

Whatever one may say, the deficit is growing, and pensions need to be increased. Finding a balance and competently resolving this issue will not work in the coming years. Even if in the near future they finally introduce the funded system promised many years ago, this will not solve the current problems.


Система Orphus

If you find an error, highlight the desired text and press Ctrl + Enter, to tell about it

see more