In Ukraine, the real size of the pension falls by 28% in the first three years due to reduced indexation.
A hidden mechanism operates in Ukraine that rapidly devalues the real size of the pension in the first three years after its assignment. And this is happening despite the fact that the Supreme Court officially recognized the artificial limitation of indexation for “new” pensioners as illegal. About this https://napensii.ua/uk/news/459247-chomu-pensiya-novyh-pensioneriv-zneczinyuyutsya-v-pershi-try-roky/ Pensioners, Dengi.ua reports. The PromPolitInform portal informs.
Instead of automatic and fair recalculation, the government continues to apply understated coefficients, forcing citizens to go to court en masse. Every month, Ukrainian courts satisfy about 4 thousand such claims against the Pension Fund.
Why the old pension calculation formula is out of touch with reality
The main problem lies in the mathematics of accruals. To calculate the basic payment, the state takes the average salary of a person for the previous three years. By the time of actual retirement, these figures are already hopelessly outdated due to permanent inflation in the country.
As a result, even with a significant insurance experience and a high white salary, a Ukrainian pensioner receives only about 28.7% of his usual income. This is catastrophically low and frankly falls short of the basic international standard of sufficiency, which is set by the International Labor Organization at 40%.
Lost thousands: how the state saves on indexation
A real financial failure awaits a person in the first three years after retiring. Instead of applying the general indexation percentage to new payments (which, for example, was a significant 19.7% in 2023), the government is adding only a symbolic 100 hryvnias to recent pensioners. Officials argue that the intended payment supposedly “has not yet had time to become obsolete”. At the same time, the real increase in prices for food and utilities eats up this money instantly.
Statistics show a frightening gap: in just three years, the real share of pensions in relation to the current average salary in the country has fallen from 29.1% to 20.9%. If the state applied fair general indexation to everyone without exception, the average pensioner could receive 7,500 hryvnias instead of the current 5,700 hryvnias. That is, the hidden loss is more than 28% of the real purchasing power of the payment.
Supreme Court Decision: Why Ukrainians Are Being Forced to Sue
The Supreme Court of Ukraine has already considered this legal conflict and issued an unequivocal verdict: limited indexation for new pensioners is illegal. This decision has created a powerful precedent that allows lower court judges to automatically duplicate conclusions in favor of ordinary citizens.
However, the Cabinet of Ministers has not yet made any changes to the scandalous resolution regulating the indexation rules. Due to this bureaucratic paradox, every pensioner who wants to get their legal money back is forced to individually go to court, wasting time and nerves, instead of receiving a fair recalculation in an automatic mode.
