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The recalculation of pensions: who and how much to increase the payments

Перерасчет пенсий: кому и на сколько повысят выплатыUkraine has one of the lowest ratio of average salary to the average pension.

Ukrainians receive some of the lowest pensions in Eastern Europe. “High” is the pension, which is 60% of previous earnings. At the moment Ukrainians in retirement get from 1312 hryvnia, the average payment of about 2000 USD. Thus according to calculations Minsotspolitiki, market basket cost this year of 3,200 hryvnia, in fact, the overwhelming majority of Ukrainian pensioners are below the poverty line.

Journalists have found out how to change the size of pensions after the reform.

How to recalculate pensions after the reform
If the MPs will support the draft of the pension reform in October to 5.6 million Ukrainians “savremena” payments. The government also proposes to postpone to October the scheduled indexation of the minimum pension will increase from 1312 to 1373 UAH.

At the moment the minimum payments to get the 8 million Ukrainian pensioners (total in Ukraine 12.1 million pensioners). As noted in the Cabinet, which is about 50% of the amount needed to pay the consumer basket for the disabled.

At the end of this year, as stated in the budget of the Pension Fund, the average payout will increase up to UAH 2000. However, the Fund’s experts did not consider possible October “modernity” of pensions, which will also affect the average size of payments.

For those who went on “the deserved rest” in 2007, the year before, the average salary in the three years set at 1 197,91 hryvnia. After this figure did not change. Although the average salary in 2014, 2015 and 2016 reached 3764,4 hryvnia. In October 2017 all legacy pensions recalculated taking into account the wages over the last three years. As a result, 5.6 million seniors payments will grow from 50 to more than 1,000 hryvnia.

An increase from 1000 hryvnia will receive more than 1.1 million Ukrainians, from 500 to 1000 UAH will receive an additional 1.9 million pensioners, from 200 to 500 UAH 1.2 million people and less than 200 hryvnia will receive 1.3 million.
However, the Cabinet of Ministers proposes to modernize not just the average three years salary, but also to reduce the assessment ratio experience.

For example, the Ukrainian, who retired in 2007, earned 1.5 times more than the average for the country and worked for 30 years, maybe to 1312 UAH (minimal). After recalculation of pensions, the same will be Ukrainian hryvnia to 1693, that is, at 382 UAH more.

The formula for calculating pension: P = SN * KZ * KS
P – amount of pension
SN – salary (average salary over the three years prior to retirement)
KZ – coefficient of wages (the ratio of his salary to the national average)
COP – coefficient of insurance (each year is multiplied by 1.35% and after the reform – 1%)

This approach is advantageous only for those who have long retired, says senior researcher of the Institute of demography and social studies Lydia Tkachenko. Those who retire in 2017, before determined the amount of the pension based on average salary over the last three years. But taking into account the coefficient estimates of experience of 1.35, and in the new formula, the government proposes to use the coefficient of 1.

For example, before the law came into force, the Ukrainian with 25 years of insurance experience, which has consistently received a salary two times higher than the average, could this year to receive pension at 2540 hryvnia. If the law is adopted, the same Ukrainian can claim a pension only in 1882, the hryvnia. In fact, all the future pensioners want a third to cut payments. This will allow the Pension Fund to save billions of hryvnia.

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