Ukraine Implements New Pension Limitations for High Earners
The Ukrainian government has introduced new restrictions on pensions for high earners, with certain exemptions for those currently serving on the frontlines or involved in homeland defense since 2014. The changes, outlined in a recent government decree, aim to balance fiscal responsibility with support for vulnerable citizens.
Pension Ceiling and Adjustment Coefficients
Pensions that exceed 10 times the minimum living wage (currently equivalent to UAH 23,610 or approximately USD 550) will be subject to reduction. The reduction coefficients range from 0.5 to 0.1, depending on the amount by which the pension exceeds the threshold:
- Pensions between 10 and 11 times the minimum living wage (UAH 25,971 or USD 615) will be reduced by 50%.
- Those between 11 and 13 times (UAH 30,693 or USD 720) will be reduced by 40%.
- Pensions between 13 and 17 times (UAH 40,137 or USD 945) will be reduced by 30%.
- Those between 17 and 21 times (UAH 49,581 or USD 1,165) will be reduced by 20%.
- Pensions exceeding 21 times the minimum living wage (UAH 54,436 or USD 1,285) will be reduced by 10%.
Exclusions and Gross-Up
The new measures do not apply to:
- Pensions for individuals currently serving on the frontlines or involved in homeland defense since 2014.
- The vast majority of the population, as around 97% of pensioners receive pensions below the 10 times minimum living wage threshold.
The government expects these reforms to reduce expenditure by UAH 19.6 billion (approximately USD 460 million) annually without significantly impacting the majority of pensioners.
This move aligns with the government’s broader fiscal plans, as noted in a recent decree establishing the 2025 budget. The Ministry of Social Policy reported that, as of November 2024, 24,600 individuals received pensions exceeding UAH 23,610, accounting for around 16% of the total pension expenditure.
