Changes in the Ukrainian pension system (since 2015)

December 28, 2014 the Parliament adopted the State Budget of Ukraine for 2015 and a number of laws governing the budget, tax, labor, pension and other legislation. Approved changes have a significant impact on the development of the pension  system of Ukraine.

1. The Law of Ukraine № 76-VIII "On amendments and ceasing invalid some legislative acts of Ukraine":

- Resizes 'special' pensions;

- Abolish early retirement for 1.5 years until retirement age;

- Provides that certain types of allowances and increases to pensions established by the Cabinet of Ministers of Ukraine;

2. The Law of Ukraine № 80-VIII "On the State Budget of Ukraine for 2015":

- Approve the subsistence level and minimum wages for 2015;

- Entitles the Cabinet of Ministers of Ukraine to establish the size of individual social benefits.

3. The Law of Ukraine № 71-VIII "On Amendments to the Tax Code of Ukraine and some other legislative acts of Ukraine on tax reform":

- Changes the threshold for taxation "large" pensions;

- Establishes a new procedure for payment of mandatory state social insurance (when buying foreign currency, in marking jewelry and household items).

4. The Law of Ukraine № 77-VIII "On Amendments to Certain Legislative Acts of Ukraine on the reform of compulsory state social insurance and legalization payroll":

- Combines funds of compulsory state social insurance due to temporary disability and accident at work and occupational diseases;

- Sets new conditions for calculation and payment of a single fee for obligatory state pension insurance. 

               

Changing the size of "special" pensions

From 1 January 2015 the appointment of pensions in such categories of pensioners, prosecutors, civil servants, judges, MPs, officials of local governments, the percentage of wages, which is taken for calculation of pension is reduced from 70 to 60.

 In the appointment of pensions according to the law "On the scientific and technical activities" percentage of wages, which is taken for calculation of pension, reduced from 80 to 60.

Provided that the pensioner any "special" categories disqualified from receiving "special" pensions in cases of corruption (dismissal from work due to a conviction for an intentional crime, using his official position or for administrative prosecution for offenses related to corruption).

Recalculation of "special" pensions will no longer be carried out every time when increase the earnings of employees. The procedure of recalculations of pensions will be determined by the Cabinet of Ministers of Ukraine.

Terminated early retirement due to redundancy and for health

From 1 January 2015 abolished the possibility of early retirement for a year and a half before reaching retirement age, if a person is dismissed due to redundancy or for health reasons. Pensions granted in advance before 1 January 2015, will be paid in the future.

The Cabinet of Ministers of Ukraine determines the size of pensions, allowances, promotions Chernobyl survivors and children of war, as well as the indexation of pensions

The minimum pension for Chernobyl invalids, additional pension for the damage caused to health as a result of the accident at the Chernobyl nuclear power plant, the size of compensation to the families for the loss of the breadwinner of the Chernobyl disaster are established by the Cabinet of Ministers of Ukraine.

A similar right is granted to the Cabinet and to determine the size of the increase of the children of war.

At present, the size of these payments established by the Resolution of the Cabinet of Ministers of Ukraine dated November 23, 2011 № 1210 and December 28, 2011 № 1381.

Law on State Budget of Ukraine for 2015 reaffirmed the right of the Cabinet of Ministers of Ukraine to establish the size of individual social benefits, including victims of the Chernobyl disaster, children of war, the military and certain other categories of citizens.

In addition, according to the State Budget, the Cabinet of Ministers of Ukraine shall approve a special procedure for indexation of pensions in 2015.

Living wage and minimum wage in 2015, UAH.

Type of social guarantees	since 1 January	since 1 December
The subsistence minimum per person per month	1176	1330
Children under 6 years	1032	1167
Children aged 6 to 18 years	1286	1455
For the working population	1218	1378
For persons unable to work	949	1074
Minimum Wage	1218	1378

For retirees, this means that with the December 1, 2015 recalculated pensions and allowances and promotions to them, based on the amount of UAH 1,074. 

Amounts more than three times the minimum wage will be taxed

According to the legislation, which was effective until January 1, 2015, subject to the amount of taxable pension of more than 10 thousand hryvnia, in terms of such excess.

Since January 1 of this year amended article 164 of the Tax Code, and is now subject to tax pensions that exceed three times the minimum wage (3654 UAH.), in the part of the excess at the rate of 15%. For example, if the pension is 4100 UAH., the taxable only 446 UAH. - the part that exceeds the limit of 3654 USD.

If the amount exceeds the three minimum wages for more than 10 times the minimum wage, the tax rate increases to 20%.

Taxation of pensions is implemented by the Pension Fund of Ukraine in the automatic mode.

Changes regarding the collection on obligatory state pension insurance (currency, jewelry)

  

Collection on obligatory state pension insurance was introduced in Ukraine in 1998

From 1 January 2015 entered into force new rules for the collection when buying foreign currency.

Fee rate increased from 0.5% to 2%, it paid only individuals who buy foreign currency in cash.

As from 1 January 2015 instead of collecting from the sale of jewelry made of gold, platinum and precious stones in Ukraine introduced fee for branding jewelry and household goods state hallmark on state enterprises assay control.

The fee - 10% of basic precious metals (gold, silver, platinum, palladium), based on the weight of the pure metal. The amount is determined at the official rate of precious metals at the time when the product is supplied to the branding. 

Inspections regulatory bodies - with the approval of Cabinet of Ministers or at the request of the enterprise

Legislation, which came into force on 1 January 2015, extended the moratorium on checking supervisory bodies of enterprises, institutions and organizations, individuals - entrepreneurs. In 2015 and 2016 they will be carried out with the approval of the Cabinet of Ministers of Ukraine or at the request of the enterprise to its inspection. 

Changes in the calculation of a single fee for obligatory state pension insurance

On January 1, 2015 held significant changes in the legislation to pay a single fee, aimed at deshadowing labor market and the legalization of wages.

In particular:

- There charging a single fee for each insured person;

- Enter the minimum fee per month for employees;

- Enter the reduction factor of the size of a single fee for salaried persons in the main place of work for employers who increase wages.

Explanations on calculation and payment of a single fee provides State Fiscal Service of Ukraine.