Minister of Social Policy on pension reform: minimum pension will be UAH 6,000

The major pension reform being prepared by the Cabinet of Ministers may be launched this year or next year. The minimum pension in the PAYG (pay-as-you-go) system is planned to increase to UAH 6,000, while the maximum pension will be capped at UAH 26,000. This was stated in an interview with RBC-Ukraine by Minister of Social Policy Denys Ulyutin.

The reform includes three key elements: updating the PAYG system, gradually replacing special pensions with occupational pensions, and introducing a voluntary funded pillar.

"In this model, our proposal is that we will not pay less than 6,000 to anyone," the minister said.

In particular, it is planned to return to the principle of "what you paid is what you get." The amount of the pension will depend on the contributions made during a person’s employment.

"The more a person has worked, even on an average salary, they will still eventually receive a normal pension, which will be much higher than it is now," Ulyutin said.

The maximum pension in the PAYG system will be limited.

"Again, this is logical. Why? Because the maximum amount from which you pay the unified social tax is also limited. Currently, it is UAH 160,000. In our model, you still won't be able to get a pension higher than ten subsistence minimums, which is UAH 26,000, because you haven't paid enough contributions for that," Ulyutin explained.

The Cabinet of Ministers estimates it will take at least 13 years to fully convert special pensions into occupational pensions if the process starts in 2026 or 2027.

During the equalization of the PAYG system, special pensions will not decrease, but they will not increase either. According to Ulyutin, this will be a "transitional moment."

Without reform, the Minister of Social Policy warns that Ukraine risks a collapse of the social system.

"If a person receives UAH 4,000 in pension, they are guaranteed additional social benefits – subsidies, etc. These payments often consume the same or more resources than the person would receive as a proper pension. If a person receives UAH 6,000 instead of UAH 4,000, it means a better quality of life, access to medicines, and less reliance on subsidies," Ulyutin explained.

• The government is consulting with the Ministry of Finance, the World Bank, and the International Monetary Fund to ensure the reform is financially sustainable and does not put additional pressure on the budget.
• In April 2024, the Verkhovna Rada failed to pass draft law No. 9212 on funded pensions. Former Minister of Social Policy Oksana Zholnovych said a new attempt to adopt a legislative framework for funded pensions was planned for 2025, with the first savings to begin in 2026, but this did not happen.
• The current minister, Denys Ulyutin, said the main problem with launching funded pensions is finding reliable instruments in which to invest these savings.

CORRECTED: The headline of the news incorrectly stated the position of Denys Ulyutin.