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What Ukrainian Pensioners Will Get From the Pension Modernization?

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Last October pension modernization for 5.6 million pensioners was announced. In particular, a recalculation of pensions in relation to real wages. As for today, pensions depending on the year differ twofold.

In comments to VoxConnector CASE Ukraine economist Natalia Leshchenko said that it is not clear who will experience pensions rise, and who will not. It is also unclear in what order it will be implemented.

Funds for a complete modernization no one has. In other countries, it is also not fully implemented. By 2012, the process of pension modernizing in Ukraine increased by at least 20% of the growth in wages.

Only the government will benefit from non-regular and premature pensions increase. This step allows it to gain electoral points ‘here and now’. Pensioners` prize is fairly conventional: once they will experience their pensions increase, and then five years they will have to live with this increase, the expert commented.

In December last year the government started to speak about that fact that pension modernization required additional resources. A bet placed, that the costs will be raised from the minimum wage increasing to UAH 3200.

As for today, the situation with the filling of the budget is good, but it is too early to rejoice. According to the National Bank of Ukraine insights, the wage growth may increase unemployment and inflation.

You may hear some numbers in the expert community that 75% of the population has not seen wage growth. Every eighth private entrepreneur has been closed.

So do not rush to positively estimate the fiscal effect of raising the minimum wage.

May 4, 2017