What's wrong wih Ukraine's "modernization" of pensions?

Author : Iryna Shostak

Source : 112 Ukraine

In a few days, the traditional "modernization" of pensions is planned - 8 million Ukrainian pensioners would get additional 11 USD
21:56, 5 March 2021

National Bank of Ukraine

The growth of inflation this year is forecasted at the level of 6.5-7%. So, in particular, already in January vegetables have risen in price by an average of 15%, electricity tariffs will increase by 30% during the year, and for cold water – by 10-15%. How much will the standard of living of pensioners increase if their pensions are planned to be increased by 11%?

Obviously, 3-6 USD surcharges will not significantly improve the situation: inflation annually eats up a scanty indexation. While the minimum wage reaches 2,200 USD, over 70% of Ukrainian pensioners receive a pension of up to 150 USD. This money is not enough not only to pay utility bills but also for medicines.

A person, having worked for the state for 30-35 years and hoping for decent support in old age, often receives a pension that is half the cost of utilities and 2.5 times less than the minimum wage (we are talking about pensioners aged 65 with sufficient experience).

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

What can we say then about the pensions of people who have lost the ability to work – the gap between the size of such a pension and the size of the minimum wage increases every six months. So, in the summer of 2020, the minimum wage was 2.75 times the minimum pension. Now the gap has increased 3.4 times. How to live on this money is a problem with three stars.

And all because for calculating the pensions of persons who have lost the ability to work, the basis is the subsistence minimum, the absurdity of which is recognized even by the officials themselves, because in parallel with it, the actual subsistence minimum is calculated. By the way, even this amount is 20 USD more than the minimum pension.

At the same time, the authorities last year managed to fail even that basic indexation by 11%, which is now being discussed. To end this vicious practice, a government bill was recently registered that proposes to fix the date of the annual indexation of pensions (March 1) and change the procedure for its recalculation. In addition, the procedure for recalculating pensions is simplified.

However, even here the ministers managed to save money on pensioners: for some of them, the indexation will be even less than before.

"Not only military pensioners are under threat, but also pensioners who worked in hazardous industries, who have some kind of pension benefits for retirement or pension payments. Pensions will be combed" with the same brush – and there will be violations of the rights of different benefit groups to pension payments. This is a general trend," financial analyst Oleksiy Kushch says.

It is high time for the authorities to remember that well-fed and healthy pensioners can give the state more than it gives them. Pensions are definitely not the money that goes offshore. Therefore, by increasing spending on pensioners, it is possible to restart the Ukrainian economy: the larger the pension, the more pensioners can afford to buy.

Related: Overwhelming destitution: What Ukrainian pensioners should expect in 2021?

It is necessary to start the changes with the introduction of the "gold" standard - the unification of all basic values ​​of social payments into one, followed by a step-by-step increase, tangible for all categories of Ukrainians.

No money for such maneuvers? Let us recall that, according to the assessments of studies of various Ukrainian and international economic centers regarding the role of our "shadow" economy, only at customs and tax authorities due to "twisting" and smuggling, the state loses 540 million USD a month. Adding to these funds the illegal use of Ukrainian subsoil, the work of state-owned companies, which is riddled with corruption schemes, and so on, one can reach quite real figures, which, if the right strategy and economic development program are implemented, will really improve the standard of living of Ukrainian citizens.

This is how it looks without scanty ephemeral indexes or markups.

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