What will pensions look like in 2025? Will there be an indexation of pensions, and how many years of service are needed to retire? Reports TSN. This information is provided by Kontrakty.UA.
For all the details, see the exclusive report on TSN.ua.
The government announced plans to reform the pension system this year. According to the 2025 state budget, the minimum pension amount will remain unchanged this year. The subsistence minimum and social benefits will stay the same until 2028.
Currently, the minimum pension in Ukraine is 2361 UAH for those without service, while the minimum wage is 8000 UAH and the subsistence minimum is 2920 UAH.
However, all pensions will be paid out. This was stated by President of Ukraine Volodymyr Zelensky. He assured that there are funds available for payments in Ukraine. Notably, pension indexation for 2025 will still occur. According to expert Lidia Tkachenko from the Institute of Demography and Social Research, pensions in Ukraine may increase by approximately 10-12% in March. However, even if the 2025 pension is raised, the changes will be minimal for most pensioners. For instance, with a payment amount of 3000 UAH, a 12% increase is hardly noticeable.
At the same time, the draft state budget for 2025 proposes to withdraw money from the bank accounts of pensioner internally displaced persons (IDPs) registered before February 24, 2022, if they have not undergone identification. This means that "Oschadbank" will be required to transfer the remaining funds from the pension accounts of IDPs opened at this bank back to the Pension Fund of Ukraine (PFU).
The next pension indexation in Ukraine will take place in March 2025. Initially, pensions may increase by 10% to 17%. However, the requirements for the minimum service period for retirement in 2025 will also increase. If you wish to retire at 60, your work experience must be at least 32 years; at 63, it should be between 22 and 32 years; and at 65, at least 22 years of service.
The later a retiree enters retirement, the higher the amount of financial support will be. Thus, the payout amount can be increased by delaying retirement.
In 2025, Ukrainians can expect two phases of pension increases: the indexation taking place in March and an increase in payments for some pensioners in the summer. However, an increase in social benefits is possible only after legislative changes. This was stated by Minister of Social Policy Oksana Zholnovich. According to her, the pension increases will primarily affect Ukrainians who retired a long time ago.
"They will all receive an increase. This will depend on the size of the Unified Social Contribution (USC) paid and the length of service," she clarified.
The minister also noted that large pensions will not be cut. Zholnovich also announced a pension reform that the Verkhovna Rada (Ukraine's parliament) is expected to adopt.
The start of the pension reform could occur as early as 2025. This is mentioned in the draft law "On the State Budget of Ukraine for 2025," which the government has revised and submitted for a second reading in parliament. In point 31 of this draft law, it is instructed that the Cabinet of Ministers of Ukraine "take measures to implement pension reform starting July 1, 2025." Both the government and parliament have long discussed the need to introduce a funded pension system in addition to the solidarity system currently in place in Ukraine.
In particular, it is proposed that part of the Unified Social Contribution (USC) paid by employers (22% of salary) be directed to the employee's funded account. This account can be supplemented with voluntary contributions and contributions from the state. However, there are other options. A draft law No. 9212 "On Funded Pension Provision" was registered in the Verkhovna Rada back in April 2023 by a large group of deputies. However, by April 2024, it did not gain enough votes in parliament and was returned for revision. Consequently, if this draft law is revised and reintroduced to parliament, it will be significantly altered. According to the current version available on the Verkhovna Rada's website, it proposes that employers transfer part of the USC funds for employees under the age of 55 to their funded accounts in the following proportions:
- first year — 1% (from 22% USC)
- second year — 1.5%
- third year — 2%
This money becomes the property of the person for whom the funded account is opened, and heirs can receive it if the person dies prematurely. Additionally, it is expected that the funded accounts will also be supplemented by the state on a "parity basis" in the first three years — up to 3% of the average salary. The draft law also stipulates that in the first year of such a system's existence, the state will spend nearly 31 billion UAH on this.
Employees will also be able to contribute additional personal funds to their funded accounts to ensure a higher future pension. The funds accumulated in these accounts are planned to be invested to increase their value, countering inflation rates.
Moreover, the Ministry of Social Policy has developed its draft law, which has not yet been submitted to parliament for consideration. According to this, the funded pension system is planned to be introduced starting January 1, 2026. This draft law includes different amounts and sources of contributions to employees' funded accounts:
- first year — 1% from USC and 1% from personal income tax (PIT)
- second year — 2% from USC and 2% from PIT
- third year and beyond — 3% from USC and 3% from PIT
These funds are to be paid by employers for employees until they reach the age of 55. To receive a higher pension, citizens can also make additional contributions to their funded accounts. During the first three years, these funded accounts will accumulate in a state investment fund, after which citizens will be able to choose where to keep them, including in private funds. However, this draft law does not provide for state co-financing of citizens' funded accounts. As a result of the pension reform, every person will have the opportunity to receive a pension of no less than 60% of their earnings in the future, which aligns with European standards, noted the Minister of Social Policy of Ukraine Oksana Zholnovich.
At the end of October, the head of the parliamentary Committee on Social Policy and Veterans' Rights, Halyna Tretyakova, also submitted draft law No. 12165 "On Amendments to Certain Laws of Ukraine Regarding Pension Provision for Certain Categories of Employees (Officials)." It proposes, among other things, to remove provisions on pension provision for judges from the law on the judiciary and amend the legislation regarding special pensions.
As indicated in the explanatory note to the draft law, its purpose is to "establish uniform conditions for recalculating pensions, regardless of the law under which the pension is calculated, including for prosecutors, as well as uniform conditions for granting pensions for length of service — after dismissal from office."
The necessity of adopting this law is justified by the fact that a situation has developed in Ukraine in which the number of lawsuits regarding the appointment and determination of pensions by court decisions, primarily for prosecutors, has increased due to the different application of pension legislation over the past ten years.
Therefore, the draft law proposes the following:
- to grant pensions for length of service to prosecutors after their dismissal from the prosecutor's office
- to recalculate pensions for law enforcement officers and prosecutors considering the growth of monetary incomes of the population in Ukraine and the increase in consumer prices based on a coefficient determined according to paragraphs two and three of part 2 of article 42 of the Law of Ukraine "On Mandatory State Pension Insurance"
- to implement from January 1, 2025, part 5 of article 61 of the Law of Ukraine "On Legislative Activity," which states that if a law norm is recognized as unconstitutional by the Constitutional Court of Ukraine, this does not provide grounds for courts to apply norms of laws that are no longer in effect when making decisions
- to legally define that changes to pension legislation can be made only by a separate law amending the Law of Ukraine "On Mandatory State Pension Insurance" or "On Pension Provision for Persons Dismissed from Military Service and Some Other Persons"
It is noteworthy that there is no single pension system in Europe applicable to all countries. Most EU countries use multiple systems simultaneously: solidarity, funded, government, private, and insurance. Pensioners can participate in several systems at once and, accordingly, receive