Ukraine is planning a major reform of the pension system, which could radically change the way pensions are calculated. The government has developed draft law No. 9212, which provides for the introduction of funded pension provision. This draft has already been returned for revision by the Verkhovna Rada, and after the government makes the recommended amendments, it may be resubmitted to parliament in September this year.
The Minister of Social Policy of Ukraine, Oksana Zholnovych, spoke about the comprehensive approach to the development of this draft law. She noted that the new system should include several components, since a separate element will not be able to function effectively. In particular, the pension system of Ukraine provides for:
- Mandatory savings system.
- Voluntary savings system.
- Solidarity pension system.
The minister also announced that Ukraine plans to introduce a professional accumulative system. The new pension system will take into account two main criteria: the number of years a person has worked and the number of contributions he or she has paid each month. These indicators will be converted into a certain number of points, where each point will be equal to 30% of the average salary for a specific year.
According to the new rules, if a person has worked for 35 years and received an average monthly salary, they can count on a pension of at least 30% of their salary in the solidarity pension system.
In addition, Zholnovych stressed the importance of guaranteeing a minimum pension level. If a person has worked for at least 15 years and has become a member of the pension system, he or she is entitled to 30% of the minimum wage in the relevant year. In total, this will provide a replacement of 40% of earnings in the solidarity pension system alone, which significantly exceeds the contribution rate of 18%.
The introduction of professional savings is planned from 2026. The Minister noted that a corresponding bill has been prepared, which provides for a reduction in the tax burden on employers. This will allow employees to save another 20% of their earnings throughout their lives, which in total will amount to 60% of pension benefits.
Zholnovych expressed hope that the new pension systems will start operating from 2026, but significant work needs to be done for this, including the implementation of IT solutions to automate processes. The government is counting on parliamentary support to implement these plans in early 2025.
