Danylo Hetmantsev, the head of the parliamentary committee on finance, tax and customs policy, said that the current pension formula in Ukraine is unfair and contradicts international norms. According to him, the Ukrainian pension accrual system does not comply with the International Labor Organization Convention No. 102 on Minimum Standards of Social Security.
The international standard stipulates that a pension with 30 years of experience should be at least 40% of earnings. In Ukraine, with 30 years of experience, the pension is only 30% of the salary, that is, one year of experience "weighs" only 1% of the pension replacement. Even with 35 years of experience, Ukrainians receive only 35% of their salary instead of the guaranteed 40%, which in practice reduces the pension by another 5%.
Another factor in underestimating pensions, according to Hetmantsev, is the use of the average salary for the previous three years, rather than the current one at the time of retirement. This leads to an additional reduction in payments by about 14%. As a result, the total losses of Ukrainian pensioners due to the imperfection of the formula can reach up to 19% of the potential pension.
The Minister of Social Policy, Family and Unity of Ukraine, Denys Ulyutin, noted that the introduction of a mandatory funded pension system is currently premature, since the country's financial market is not ready to effectively invest the funds of such funds.
