The level of pension payments in Ukraine remains extremely low and does not provide normal living conditions for the majority of pensioners. The MP from the OPPOSITION BLOC Mykhailo Papiev stated this, commenting on the consequences of the pension reform adopted by the government.
“Already we can say that the pension reform of the government has failed. She could not stop the deterioration of the financial situation of pensioners. Thus, in dollar terms, the average pension has almost halved since 2013. If at the end of 2013 the average pension was 191 US dollars, then in July 2018 – 98 US dollars. The so-called modernization of 2017 did not change the situation. Pensions recalculated 5.6 million pensioners (47% of the total), but half of them received allowances of up to 500 hryvnias. This “modernizing” did not cover even half of the devaluation of pensions due to the inflation of the last 4 years: if from 2014 to the first half of 2018 prices increased by 140%, then the average pension was only 68%. As a result, our pensions are 2.3 times lower than the lowest pension in the EU, and more than 40% of pensioners have incomes below the actual subsistence minimum and are below the absolute poverty line,” Mykhailo Papiev said.
He noted that pension reform also worsened the conditions for retirement. “The insurance period has been increased from 15 to 35 years. De facto for many people this means raising the retirement age to 65 years, while others have lost their right to a pension, because with length of service up to 15 years, instead of a pension, a person can receive only temporary social assistance (from 01.07.2018 - UAH 1435). For Ukraine, this is a huge problem, since a significant proportion of people did not have the opportunity to pay Unified Social Tax in the 90s (agricultural workers, self-employed persons, etc.). The coefficient of insurance experience has decreased from 1.35 to 1.0, which will certainly affect the level of accruals,” the opposition politician said.
According to the MP, despite all these very tough innovations, the problem of the Pension Fund deficit could not be resolved. In the budget-2019, a record deficit of the Pension Fund is planned - 166.5 billion UAH or 4.2% of GDP. In addition, labor migration, low employment and the aging of the labor force increase the burden on the Pension Fund and stimulate poverty among all segments of the population.
“Considering the above, we can say with confidence that the extreme poverty among pensioners will not only continue in 2019, but will even more aggravate. The subsistence minimum of 2019 fixes the minimum pension at the level of 1 497 – 1 638 UAH, and its growth during the year will be only 141 UAH or + 9%. Although with the full indexation of the minimum pension for inflation in 2014-2019, its size at the end of 2019 should reach 2,562 UAH (instead of 1 638 UAH as it is laid by the draft budget). The OPPOSITION BLOC strongly opposes both the pension reform and the anti-social draft budget 2019. We made our suggestions. In particular, we propose to increase the cost of living by more than 2 times – so that by the end of 2019 it was 3800 UAH. Over the next year, the minimum wage should increase by 75% - up to 7,000 UAH. The minimum pension is proposed to increase by 3 times, so that at the end of 2019 it reaches the mark of 4500 UAH. It is necessary to significantly increase spending on the development of socially-sensitive spheres of life of Ukrainian society, which are now in deep crisis. This, above all, is education, health care, and the social sphere. Our proposals for increasing budget expenditures are quite realistic and are based on appropriate proposals for expanding its resource base. We are convinced that it can be increased by 140 billion UAH due to the correction of the macro outlook, as well as the reduction of inefficient items of expenditure, including for the bureaucratic apparatus and the power structures,” Mykhailo Papiev said.