Pensions and salaries of citizens are one of the most important indicators of the country’s socio-economic development, on the basis of which the state budget is drawn up, the level of solvency of the population is determined, utility tariffs and prices for goods of social importance are regulated.
Every year, the government of Ukraine revises the minimum wage, the living wage of citizens, and also indexes pensions and salaries of civil servants.
Indexation of pensions of Ukrainian pensioners in 2024
Based on the published data from Opendatabot, citing information from the Pension Fund of Ukraine, at the beginning of 2024, the number of pensioners in Ukraine amounted to 10,516,537 people. Of them:
— 51% of pensioners received a pension of less than 4,000 hryvnia.
— 30% of pensioners received a pension that was greater than or equal to the average pension, which by the beginning of 2024 amounted to 5,385.25 hryvnia.
From January 1, the minimum pension in Ukraine increased from 2093 hryvnia to 2361 hryvnia. In addition, from March 1, 2024, the next indexation of pensions was carried out.
Recalculation of pensions in 2024 is carried out in 3 stages:
— In January 2024, there was an increase in payments to those who receive the minimum and maximum pensions, associated with a change in the size of the cost of living.
— In January and July 2024, pensions will be transferred to those receiving a minimum pension of 65 years with full insurance coverage: for men with 35 years of experience and women with 30 years of experience.
— In March 2024, pensions were increased for everyone affected by the new indexation.
Increase in pensions from March 1, 2024
In March, the amount of payments was transferred to 9.5 million civilian pensioners, 600 thousand pensioners of law enforcement agencies and 100 thousand receiving a disability pension due to the Chernobyl disaster. The recount affected 20.8 thousand scientists, civil servants, local government employees whose pensions were not previously indexed, as well as those who were included in the indexed list only in the last two years. Their payments increased to the maximum pension amount under the law without taking into account allowances.
After indexation, average payments increased by 322 hryvnia, which led to an increase in the average pension from 5395 to 5717 hryvnia. The increase in the amount of payments is limited to 1,500 hryvnia for all pensioners and recipients of insurance payments, regardless of their category. It is important to note that in any calculation the increase was at least 100 hryvnia.
According to the Pension Fund, the minimum pensions for military personnel with disabilities as a result of war have been increased by a factor of 1.0796:
— 1st disability group: the amount of payments is 6493.72 UAH (previously 6014.93 UAH);
— Disability group 2: the amount increased to UAH 5,957.41 (versus UAH 5,518.17);
— Disability group 3: pension increased to UAH 5,680.87 (versus UAH 5,262.01).
For other persons with disabilities, pensions have changed:
— 1st disability group: 5950.96 UAH (previously 5512.19 UAH)
— 2nd disability group: 5680.87 UAH (versus 5262.01 UAH)
— 3rd disability group: 5409.49 UAH (versus 5010.64 UAH)
Minimum disability pensions caused by the Chernobyl disaster have changed as follows:
— 1st disability group: 8839.20 UAH (previously 8187.48 UAH)
— 2nd disability group: 7071.36 UAH (versus 6549.98 UAH)
— 3rd disability group: 5450.85 UAH (versus 5048.95 UAH)
— children with disabilities: 5450.85 UAH (versus 5048.95 UAH)
“This is the third time our government has increased pension payments since the start of a full-scale war. But, despite all the challenges and difficulties, we continue to help our citizens. We are not just carrying out the next indexation, but also expanding the coverage of ever larger segments of the population,” Ukrainian Prime Minister Denis Shmigal emphasized at a meeting of the Cabinet of Ministers.
In Ukraine, the average salary is used to determine the size of the pension. This figure increases every year by a certain factor. The coefficient is calculated based on 50% of the previous year's inflation rate (for example, in 2023 it was 5.1%) and 50% of the average salary increase for the 3 years prior to the year in which the increase occurs. For example, if there is an increase in 2024, then compare data for 2021, 2022 and 2023 with data for 2018, 2019 and 2020. As a result of such calculations, in 2024 the coefficient was 10.72%.
Vladimir Maksimchuk, head of the department of social insurance and pensions of the Federation of Trade Unions of Ukraine, in particular, commented on the latest increase in pensions:
“In our country, the level of pension provision is too low. Although indexation, to a certain extent, improves the financial situation of older people, any indexation depends on the size of revenues into the social insurance system and the Pension Fund. Therefore, for citizens with low pensions, additional payments are not very large. For pensioners with large pensions, even a 10% increase is already significant.”
Raising the minimum wage and civil servant rates
In addition to pensions, indexation in 2024 will also affect the minimum wage in Ukraine, which is regulated by the Law on Remuneration. This became known from the Ministry of Social Policy.
Last year, indexation was suspended, so calculations for 2023 were not made. According to the budget law for 2024, starting from January, indexation will be calculated on an accrual basis, taking into account the previous month - December 2023. If wages were not increased until January 2024, the base month will be December 2023. However, for those promoted in January 2024, the base month will be January 2024. For many workers, the base month may be January 2024 due to cost of living and minimum wage increases. If inflation rates continue, the first wage indexation in 2024 may occur in April-May.
According to the latest changes, from January 1 of this year the minimum wage is 7,100 hryvnia per month or 42.60 hryvnia per hour. The next increase in the minimum wage is scheduled for April 1, when it will increase to 8,000 hryvnia per month and 48 hryvnia per hour.
According to the information provided in the letter of the Ministry of Finance dated 08/07/2023, further plans to increase the minimum wage have also already been determined: from January 1, 2025 it will be 8,370 hryvnia, and from January 1, 2026 - 8,956 hryvnia.
“There are grounds for increasing the minimum wage in Ukraine, since further growth of the Ukrainian economy is expected in 2024,” notes investment banker and financial expert Sergei Fursa. Economic growth is a consequence of the macroeconomic stability of our state, which, of course, is a unique phenomenon in the conditions of a full-scale war.”
The expert also added that raising the minimum wage encourages businesses that pay salaries in envelopes to pay it to their employees officially, and this increases tax revenues to the budget, which is a very positive phenomenon.
The indexation of pensions and the increase in the minimum wage in 2024 will be carried out based on the consumer price index and will depend on the socio-economic situation in the country.
