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Pension reform in Ukraine: to retire will be harder

Пенсионная реформа в Украине: выйти на пенсию будет сложнееSome important nuances that need to know the Ukrainians.

The Cabinet has submitted to Parliament a package of bills on pension reform. Although the reform does not involve raising the retirement age, some Ukrainians will have to retire later.

The Cabinet finally submitted to Parliament a package of bills that will be the basis of pension reform. On the website of the Verkhovna Rada registered four documents: No. 6614 “Draft law on amendments to some legislative acts of Ukraine on increasing pensions”, No. 6615 “Draft law on amendments to article 588 of the Customs code of Ukraine on pensions”, No. 6616 “the Draft law on amendments to the Tax code of Ukraine concerning pensions”, No. 6617 “Draft law on amendments to the Budget code of Ukraine on increasing pensions”. The texts of these documents have not yet been published, however, the media revealed the contents of the bill on amendments to some legislative acts on increasing pensions, which was approved at the government meeting on June 21.

The Cabinet, as promised earlier, is going to increase existing pensions. At this point the names of two of the four submitted to the Parliament draft laws. In may Prime Minister Vladimir Groisman said that the pension reform will provide for automatic annual pension modernization. Recalculation of pensions will be based on the current level of the average salary in the country. Today, she is 3764 UAH per month.

In addition, will be abolished taxation of pensions to working pensioners. “October 1, 2017, the payment of pensions to working pensioners in the period of work is renewed in accordance with this law,” – the document says.

The main point of pension reform is insurance experience – that is, the period of time during which every Ukrainian paying on their income to the Pension Fund the single social contribution (ERU). For employees it is deducted employers, natural persons-entrepreneurs (FLP) do it yourself.

Today, for the old-age pension (for men this age is 60 years for women, as for 2017, he is 58 years and increases every year by six months to 60 years in 2021) Ukrainian citizens must have the insurance experience not less than 15 years. However, in the case of reform, it will rise to 25 years, and from January 1, 2018. After that, within ten years of insurance experience will increase annually for one year and on January 1, 2028 and will be 35 years.

Thus, if after 1 January 2018, the person will be 60 years and his pensionable service is less than 25 years old, he will not be able to obtain a retirement pension. Although the proposed reform does not increase the retirement age for Ukrainians, but, in fact, stimulates later retirement. Under the bill, persons not having the required experience may retire at 63 years – then, as of January 1, 2018, the requirement for insurance experience would be 25 years, and only 15. But later the minimum threshold will increase annually (for one year). And those who decide to retire at 63 years, in 2028, will need to have been insured for 25 years.

In addition, the Ukrainians can defer retirement on an even later date – up to 65 years. In this case, the requirement for the insurance period will remain at 15 years and in subsequent years.

However, even if in this case the person does not have enough insurance experience, he can rely on social assistance from the state, which in the strict sense of the word pension is not.

Social assistance for those who do not have the necessary experience, exists today. “There are so-called social pension for those people who have not worked without valid reasons. Such a person can retire, but he, respectively, will have the proper amount of pension which he would have had if you have the necessary insurance experience,” – said in comments “Apostrophe” head of public programs “at the Institute of social and economic research,” Marianna Onufryk.

To qualify for social assistance will persons over 65 years. Such payments depend on the General level of security of the person. “It all depends on whether there are other sources of income. If a man is alone and has no right to receive a pension because they did not satisfy the conditions of the insurance experience, but he has no other sources of income, so this person can contact the social security authorities, and he will be assigned to social assistance, in order that his income has reached the minimum level of subsistence. This provision of the Constitution,” – said the expert. At the same time, she said, in this case we are not talking only about people of retirement age. “There is help for low-income families. If you divide the income of all household members and a household member turns less than minimum wage, then such a family could qualify for public assistance,” said Onufryk.

Ukrainians should understand that their future pension not only depends on the number of years worked and amounts of deductions to the Pension Fund the single social contribution (ERU). For example, a person with an insurance period of 25 years, but with high payouts will have about the same pension as a person with experience of 40 years, but receiving all this time, the minimum wage and, accordingly, to pay the single contribution for a minimum. But the problem with the SSC is solved. “Everyone can write a statement to apply to the Pension Fund and pay more if he wants,” – said the expert.

It should also be borne in mind that the inclusion of insurance in Ukraine is conducted only from July 2000. What about those who began working before? How these people counted insurance experience? “As for the time before 2000, you should submit supporting documents (to confirm experience, – ed.). The fact that we have in Ukraine is a very big problem with the supporting documents – employment records you could buy, maybe now you can. Who worked in Russia in the far North today to make an inquiry about it is impossible,” – said Marianna Onufryk. According to her, earlier there were proposals to take into account the experience acquired before 2000, not fully. “But today there is no such, just being more careful control, because the Pension Fund does not have the confidence that what is written the man in the workbook that corresponds to reality, because there are so many fraudulent schemes,” she said.

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