The Cabinet of Ministers is set to present its pension reform plan: what might change
This was reported by the “Judicial and Legal Gazette”, citing a Member of Parliament. Previously, the Ministry of Social Policy, Family and Unity stated that it was working on a comprehensive pension reform and proposed changing the approach to the funding of special pensions.
On 8 June, the Cabinet of Ministers is due to present the concept of pension reform to the Coalition Council.
The Verkhovna Rada expects the reform to review the pension calculation formula, the indexation mechanism and approaches to special pensions.
According to the government’s plan, the future system should become fairer and eliminate the imbalances that have arisen due to different rules for specific categories of pensioners.
What changes are being proposed for special pensions
The Ministry of Social Policy previously reported that, as part of preparations for pension reform, it is proposing to change the approach to special pensions. This involves a transition from the current model of special pensions to occupational pensions.
Minister of Social Policy Denys Ulyutin explained that special pensions currently operate under strict parameters. For example, 25 years of service may be required to qualify for a special pension. If a person has 24 years of service, they do not receive such a pension and effectively lose all their special service record for this benefit.
In contrast, according to Ulyutin, an occupational pension should allow for the accumulation of savings after just the first year of occupational contributions.
What this means for military personnel
Separately, the government has highlighted the unfairness faced by those who have been mobilised.
Ulyutin noted that a soldier who has served on the front line for 2–3 years may currently not be entitled to a service pension, as the law requires a significantly longer period of service. Under the new model, even one year of service should entitle the soldier to a professional pension.
A separate state allowance is also being considered for combatants.
If a conscript decides to remain on a contract after the war, their occupational pension should increase in line with their length of service.
Who will pay for occupational pensions
The Ministry of Social Policy emphasises that occupational pensions should not be funded from the state budget, but from additional contributions paid by employers.
In other words, this involves a separate mechanism for professions involving increased risk or special working conditions.
The aim of the reform is to separate such payments from the general pay-as-you-go system so as not to place an additional burden on the Pension Fund.
What will happen to special pensions already awarded
The Ministry of Social Policy has stated that citizens who are already receiving special pensions should not lose their allocated payments.
For those already serving or working within the system, the transition to the new model is to be gradual.
Years of service or work prior to the launch of the reform are planned to be counted under the old rules, and after the launch – under the new ones.
If a person already has more than half of the required length of service, i.e. more than 13 years, they will be able to retire under the special pension rules.
How long will the transition take
According to Ulyutin, the transition from special pensions to occupational pensions could take around 12–13 years.
This period is needed so that people who are just entering the profession have time to accumulate occupational contributions for future pension payments.
The Ministry also reported that it is finalising the financial calculations for the new pension system over a 15-year period to ensure its sustainability not only in 2026–2027 but also beyond.
What else might the reform include
Previously, the Ministry of Social Policy described the upcoming pension reform as a comprehensive model comprising several elements.
These include a basic payment upon reaching a certain age, an updated solidarity system, occupational pensions for specific categories, and voluntary savings.
Under the current system, the old-age pension is calculated using a formula that takes into account the salary used for pension calculation and the insurance period coefficient. The Pension Fund explains that the insurance period coefficient is determined as the ratio of the number of months of insurance to 1,200.
This is precisely why revising the calculation formula could become one of the most sensitive aspects of the reform.
What is important
At present, we are discussing the concept of pension reform, not a law that has already been passed.
According to the Ministry of Social Policy, the draft law intended to launch the reform is still being finalised. The ministry is finalising the financial calculations to ensure the system is sustainable in the long term.
Therefore, the specific rules, launch dates and final model will become clear once the government officially presents the concept and submits the draft bill to parliament.
Follow us on Telegram
