Ukraine parliament approves govt draft of pension reform.

8/7 Tass 55

KIEV, July 8 (Itar-Tass) — Deputies of the Verkhovna Rada (parliament) of Ukraine overnight to Friday passed in the second reading and on the whole the government’s draft pension reform. A total of 248 MPs of 226 required minimum voted for the document.

Consideration of the bill lasted 8.5 hours. The document raises the retirement age for women from 55 to 60 years, the pensionable service was raised from 20 to 30 years for women and from 25 to 35 years – for men. The retirement age of male civil servants men was raised to 63 years.

The adopted bill limits the size of the maximum pension for those who have lost their ability to work to 10 minimums, i.e., 7,640 hryvnas (100 US dollars)/. The document also decreases from 90 percent to 80 percent the wage for calculating pensions for civil servants. The maximum pension is limited to 10 minimum incomes (some 1,000 US dollars at present).

The adoption of the pension reform was one of the conditions of the International Monetary Fund (IMF) for the resumption of the extension of loans to the Ukrainian economy.

The adoption of the pension reform by the Ukrainian parliament in the first half of July will with a high degree of probability allow the Board of Directors of the International Monetary Fund to decide in August on the renewal of funding for Ukraine, Ukrainian Deputy Prime Minister for Social Policies Sergei Tigipko told the media earlier. “If the parliament on July 4-8 votes for the pension reform, in early August we can get the decision of the IMF Board of Directors,” he said. Tigipko suggested that the two tranches of the IMF might be combined. “Maybe we will simultaneously obtain two tranches – about three billion dollars, which will be added to the foreign exchange reserves of the National Bank.”

“If there is no pension reform and improvement of the condition of the Pension Fund, I shall resign,” he promised in March. Tigipko also said that before the summer the government would hold the “maximum number of reforms.”

The implementation of the pension reform in Ukraine has been postponed several times. Recently, the country’s parliament refused to consider the pension law raising the retirement age and promised to look into it again in April. Tigipko called this decision as an act of sabotage against the country’s reform policy. “The government lacks the political will to take the responsibility for unpopular measures. It’s embarrassing political populism matching the worst traditions of the past,” Tigipko said. He argued that the need to raise the retirement age is obvious to all experts. “The opponents of this have not a single serious argument,” said Tigipko. He added that the slowdown of the pension reform will be a hindrance in the fight against poverty in the country. “This means we shall have no money to pay pensions and salaries. We are perpetuating poverty,” Tigipko stated. He also noted then that delaying the reform would seriously complicate the process of implementing cooperation programmes with international organisations and become an obstacle to European integration.

Earlier, the IMF had planned to give Ukraine a tranche of about 1.5 billion dollars in March, if Kiev complied with a number of conditions, including a pension reform and a rise in the tariffs of gas and thermal power for retail consumers. In July 2010 the IMF approved of a programme for financial assistance to Ukraine till 2012 more than 15 billion dollars worth. Ukraine received the first 1.89-billion-dollar tranche a year ago.

Leave a comment