New pension formula: how payments will change for 10 million Ukrainians.

The Ukrainian Ministry of Social Policy presented a pension reform

The Ministry of Social Policy of Ukraine presented a draft of pension reform aimed at improving the fairness and transparency of pension payments for Ukrainian retirees. The new bill proposes a change in the mechanism for calculating pensions, distinct from the previous link to wages. The amount of the pension will depend on the paid insurance contributions.

The bill includes two components of the system: a basic pension and an insurance part. The basic pension will account for 30% of the minimum wage after tax deductions. The insurance part will be calculated on a points system, where insurance contributions paid from different wage levels will receive the corresponding number of points.

'Pension system reform must take into account the demographic challenges facing Ukraine. The country must prepare for a 'gray' economy with a significantly higher average age of workers,' said Deputy Minister Daryna Marchak.

The reform will also provide incentives for continued employment after reaching retirement age. Workers will be able to earn additional points, which will increase the amount of their pension payments. The reform is expected to start as early as 2025.