IMF and World Bank Commend Ukrainian Pension Reform

KYIV, Ukraine, June 9, 2011 -

International Monetary Fund and World Bank approved the draft
law on pension reform in Ukraine, according to the Vice Minister - Minister
of Social Policy of Ukraine Serhiy Tihipko. The amended draft introduces a
three-tier system in Ukraine, which is common in most EU countries; also the
draft gradually raises retirement age for women from 55 to 60.

Since the draft was forwarded to the parliament six months
ago, its provisions on raising the retirement age for women, cutting down on
maximum pension size, etc., gave life to vital discussions in the Ukrainian
society. Trade unions went on strike protesting against the law-to-be. The
government, however, insisted on aforementioned provisions as inevitable. In
the light of such developments, the future law was redrafted and returned to
the parliament. It is expected that the amended draft will be voted for by
the Ukrainian law makers by August.

The most recent 11 amendments include cutting down the maximum
pension size, simplification of pension adjustments, introduction of a
one-time cash-out payment to doctors, teachers, and social workers upon
retiring, etc. The recent amendments to the draft were agreed upon with
unions and employers, according to Tihipko.

If adopted by the Ukrainian parliament, the draft will allow
to resume cooperation with the IMF and to streamline the receiving of further
disbursements under the stand-by agreement from the Fund.

The Ukrainian leadership launched pension reform to combat the
growing Pension Fund deficit, which, among other things, was caused by aging
of the population. The concept of pension reform is based on a three-tier
system, which includes the existing mandatory non-funded state or PAYGO
pillar, a mandatory state-funded pillar, and a voluntary private pension
plan. The system enables an individual to accumulate any size of pension that
they would like (and can afford) to receive at retirement. The draft law also
foresees gradual increase of the retirement age for women: the process will
take 10 years by raising the retirement age by 6 months each year.

For more information, please contact Maryna Khorunzha, +380443324784,
news at wnu-ukraine.com, Project Manager at Worldwide News Ukraine.