Ukraine Launches Pension Reform

By Worldwide News Ukraine, PRNE
Tuesday, December 14, 2010

KIEV, Ukraine, December 15, 2010 - The pension reform, initiated by President Viktor Yanukovych,
was announced today. The Cabinet of Ministers of Ukraine
submitted the draft law on pension reform to the Parliament. The draft law
intends to bring the Ukrainian pension system into compliance with
European standards, which include creating alternative pension funds, in
addition to the only existing government fund, and raising retirement age.

The key development that the pension reform aims to introduce
is the three-tier system. This includes so-called mandatory state
unfunded, mandatory state funded, and voluntary private pension schemes.
Existing in most of the EU countries, such a system enables an individual
to accumulate any size of pension that he or she would want to receive at

The key elements of the draft law also include raising of the
retirement age, cutting down the maximum pension size, and creating savings
funds. The non-governmental funds will be created to operate along with the
existing governmental one to secure pensions through insurance companies.
Announcing the reform, the Prime Minister of Ukraine Mykola Azarov said:
"Decreasing of the Pension Fund's deficit is not the main goal of the
reform. The deficit itself will be liquidated in three to four years. The
reform's main objective is to create an opportunity for people to
accumulate a pension that they need or want, based on their revenues. The
pension savings funds will become both a guarantee of decent pensions and
a source of long-term investments for the country."

According to the Prime Minister, the existing pension system
has been very unbalanced, causing a huge gap between different layers of
society. While the minimum monthly pension in Ukraine is 723 UAH (90 USD),
some people receive up to 40 thousand UAH (5000 USD) per month. Therefore,
the draft law, if enacted, will reduce the maximum pension size.

As the Ukrainian population is aging and the Pension Fund's
deficit is growing, the draft law foresees gradual increase of the retirement
age for women from 55 to 60. It is planned that the process will take 10
years by raising the retirement age by 6 months each year.

For more information, please contact Maryna Khorunzha +38-0509151565
news at, Project Manager at Worldwide News Ukraine

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