The trade unions backed the Government’s draft pension reform on the outcomes of the meeting with Minister of Social Policy of Ukraine Andrii Reva who presented the core objectives of the said reform to representatives of the trade unions The central and key aim is to restore social justice to those citizens who are already on a well-deserved rest. Hence, starting already from October 1, the Cabinet of Ministers of Ukraine proposes to carry out update of pensions that have not been changed for five years as well as to increase the minimum retirement payments. As a result, 9 million out of 12 million pensioners will receive updated pensions. Moreover, payments will be updated in an automatic way thereby taking into account inflation and the growth of wages.
While speaking about the financial provision for the reform, Andrii Reva stressed that there are resources for this obtained as a result of an economic growth, of a twofold rise of the minimum wage and effective work to overcome shadow employment. «If in 2016 there were only 112 billion hryvnias of own revenues of the Pension Fund, then in 2017 it was planned to obtain 142.5 billion UAH. Thus, budget indicators for 5 months encapsulate that the Pension Fund's proceeds will grow more than planned. This is the resource which was received from the growth of the economy not from the conversion of funds or external borrowings, but through the work of the economy. By the year (by the end of 2017) we forecast a growth of the payroll budget to the tune of 796 billion hryvnias or by 130 billion hryvnias more than planned», highlighted the Minister.
The second important step is to overcome the deficit of the Pension Fund. According to Andrii Reva, currently the Pension Fund of Ukraine is in fact a bankrupt, the amount of budget subsidies and the existing amount of debt to the State Treasury Service of Ukraine accumulated in previous years is substantial. «The fact of bankruptcy, if there is done nothing, will become decisive not even after 3-4 years, but in a year or two. At the same time, we have small pensions, even in order to ensure this payment of pensions, Pension Fund’s subsidies make up almost half of its needs, this level is being subsidized by half. Thereby we have to understand: we have no other way, as reforming the pension system. It is not a great way to live like this», emphasized the Minister.
The Government has found instruments to ensure a deficit-free budget of the Pension Fund without raising the retirement age. Along with that, transparent and understandable rules for calculating the pension are established. The calculation formula involves pension insurance record and the amount of contributions paid to the Pension Fund. Thus, the Government restores social justice for working persons. From next year the retirement age remains 60 for people who have an insurance period of 25 years. Those who do not have the required number of years of insurance experience will be paid social assistance not from the Pension Fund’s resources, but from the state budget.
The Minister of Social Policy placed a special emphasis to the fact that in case of the adoption of the said reform, starting from October 1, 15 percent reduction of pensions for working pensioners will be canceled.
«The crucial aspect is to preserve the principle of solidarity», said the Minister, adding that the solidarity system is the basis of three-tier pension system, because it enables a person to feel socially protected under all circumstances.
Moreover, Andrii Reva also underscored that that a package of draft laws on pension reform which had been elaborated and submitted to the Verkhovna Rada of Ukraine is only the beginning of the changes. At the moment, according to the Minister, a bill is being drafted which stipulates for raising pensions for the military officers and further modernization of the pension system in terms of introduction of an accumulation level.