The government calculated the size of the bonus using a formula that takes into account last year’s inflation and the average salary growth rate over the last three years. The Ministry of Social Policies guarantees that the 8 percent increase in pensions will cover the 2023 price increase.
Starting from March 1, pensions in Ukraine will be indexed by almost 8%. The average increase will be 322 hryvnia, and the average pension will increase to 5,717 hryvnia. The Ukrainian Cabinet of Ministers approved the relevant decision on Friday, February 23, during the government’s off-site meeting in the Lviv region.
“Indexation will affect more than 10 million Ukrainians. It will affect 9.5 million civilian retirees, about 600 thousand law enforcement retirees, almost 100 thousand Chernobyl victims,” Prime Minister Denis Shmygal said.
In addition, starting from April 1, the payments of 654 thousand working retirees will be automatically recalculated taking into account the updated insurance records.
Why is indexation 8% and not 13%?
Previously, the Ministry of Social Policies had predicted that pensions would be indexed by 13 percent as of March 1, 2024. They also explained that these were preliminary calculations. Prime Minister Denis Shmyhal cited the same figures in January this year. This forecast was based specifically on inflation rate forecasts.
However, in 2023, inflation was much lower than expected and therefore the indexation of pensions will be at 8 percent.
How is indexing calculated?
The size of the corresponding increase is calculated using a special formula. 50% of last year’s inflation rate is added to 50% of the annual average wage increase rate. Particularly the data of the last three years are taken into account in the payments.
According to the State Statistics Service, the inflation rate in 2023 was only 5.1%, while the increase in the average salary for which insurance premiums are paid was 7%.
“The increase in pensions will cover the price increase in 2023. Although during a full-scale war the government has the right not to index pensions, we are not only indexing, but also expanding its perimeter. ” explained the Ministry of Social Policy.
Who will index the pension?
According to the accepted decision; From 1 March Pensions will be indexed according to:
- 9.5 million “civilian” retirees, Generally, those who receive a pension
- 596 thousand retired law enforcement officers
- 97.8 thousand people, Receiving a disability pension due to injury or illness as a result of the Chernobyl disaster.
In addition, the lowest pensions will be indexed for the second time in a row this year.
“Until 2023, such pensions were not subject to indexation. Previously, retirees with the lowest pensions, as a rule, received an increase not in the entire pension, but only in its part calculated according to the insurance formula. As the Ministry of Social Policy reports, this amount is usually “It is ‘absorbed’ by other components of the pension payment, so there has been no overall increase in the size of pensions.”
The average estimated level of pension increase after indexation is 322 UAH, the average pension in Ukraine will increase from 5,395 UAH to 5,717 UAH.
Moreover, March 1 will be indexed Monthly insurance payments for 161.4 thousand Victims and persons entitled to monthly insurance payments in the event of the victim’s death.
Pensions will also be indexed by 8 percent 20.8 thousand scientists, civil servants, local government employees.
At the same time, the Government has introduced temporary restrictions on the maximum amount of pension indexation. According to the results of indexation, the size of the pension increase will be limited to 1.5 thousand UAH for all recipients of pensions and insurance payments, regardless of category.
At the same time, according to any calculations, the increase in pensions will be at least 100 UAH.
Let us remind you that Finance Minister Sergei Marchenko said that Ukraine will be able to ensure timely payment of salaries and pensions to citizens by the end of the first half of 2024. However, in his opinion, it is very important for Kiev to receive financial assistance from partners, otherwise budget problems will become noticeable to everyone.
Source: Focus
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