The new pension reform developed by Ukraine`s government suggests that Ukrainians who have reached the retirement age but lack the required length of pensionable service will be able to ”buy” up to five years of pension insurance record, according to the governmental portal.
”If a person applying for old-age benefits does not have enough years of pension insurance record, he or she will be able to pay compensation for them. The period of pension insurance record that can be compensated will be limited to five years,” it said.
The sum that shall be paid as compensation for the length of pensionable service will be calculated depending on the size of single social security tax and the minimum wage.
So, if a person had to buy the pension insurance record now, under these rules, he or she would have to pay UAH 16,896, or about US$640, for the first year, according to the Cabinet`s estimates.
At the same time, the International Monetary Fund insists that the period of pensionable service that could be ”bought” should be limited to two years while the size of such compensation should be brought in a correlation with the previous social security contributions of a person.
As UNIAN reported, the pension reform developed by the government suggests a gradual increase in the length of service before retirement from 25 to 35 years.
As part of the pension reform, the Ukrainian government plans to raise pensions from October 1, which, according to preliminary estimates, will involve some 5.6 million Ukrainians. The government will also cancel taxation of working pensioners` old-age benefits.
The government version of the pension reform does not provide for raising the retirement age, at the same time it offers other tools for developing a fair and deficit-free pension system.