Seizure of pensions and social security payments: the Supreme Court explains when an account may be frozen

This was announced by the Supreme Court.

State enforcement officers have the right to freeze Ukrainians’ bank accounts, even if they receive pensions or social benefits, if the bank’s system does not identify them as accounts subject to special treatment.

This conclusion was confirmed by a panel of judges of the Commercial Court of Cassation within the Supreme Court, having considered a complaint by an individual against the actions of a state enforcement officer.

The court noted that the freezing of funds up to the amount of the debt upon the initiation of enforcement proceedings is lawful. This specifically refers to the blocking of the account, rather than the automatic confiscation or irrevocable write-off of protected payments.

The legal logic highlighted by the court is that if an account does not have the official status of a special-purpose account, and funds for various purposes may be credited to it – for example, a pension and ordinary private transfers – the bank does not always have full information about the nature of each deposit.

In such a situation, the financial institution cannot precisely indicate to the enforcement officer which funds are subject to seizure and which are not. It is for this reason that, in the court’s view, the enforcement officer acts within the law when blocking the account up to the amount of the debt.

The Supreme Court specifically emphasised that the subsequent lifting of the attachment depends on whether the enforcement officer receives documentary confirmation that the funds in the account are indeed a pension or social benefit.

Such confirmation may be provided by the bank or by the debtor themselves. If the bank has not done so, and the debtor has not requested the relevant certificates and submitted them to the enforcement service, the court does not consider the enforcement officer’s subsequent actions, including the deduction of funds to settle the debt, to be unlawful.

Thus, the responsibility for proving the origin of the funds and subsequently unblocking the account effectively rests with the debtor themselves.

At the same time, the law sets limits not only on funds but also on property that cannot be subject to enforcement. In accordance with the Law of Ukraine “On Enforcement Proceedings”, enforcement officers are not entitled to seize items of daily household and personal use necessary for physiological and hygienic needs, items for individual use and clothing, all medicines, as well as a minimum set of furniture and household appliances.

This minimum list includes one bed and one chair per person, as well as one table, one wardrobe and one fridge for the whole family.

Separately, the text of the decision draws attention to a systemic problem. Part 2 of Article 52 of the Law of Ukraine “On Enforcement Proceedings” expressly prohibits the recovery of debts from accounts into which only pensions, social assistance or payments to persons with disabilities are paid.

However, in practice, there is no strict technical distinction in Ukraine between accounts used exclusively for social benefits and ordinary current accounts. It is precisely this that regularly leads to erroneous freezes via the Automated Enforcement Proceedings System.

The situation for debtors became even more complicated in May 2023, when the government repealed a wartime provision that prohibited the seizure of accounts if the amount of debt was less than 100,000 hryvnias.

Since then, accounts can be frozen even for small debts – in particular, for unpaid fines for traffic offences or utility bills.

To ensure they are not left without funds for essential needs whilst their account is frozen, the law allows debtors to submit a request to the enforcement officer to unfreeze a guaranteed amount for expenses up to two times the minimum monthly wage.

However, this mechanism does not operate automatically and requires active steps on the part of the individual.