Pensions have been underpaid for years, and now the Pension Fund will be forced to pay fairly

22 May 15:11

Ukrainians are applying to the courts for pension recalculation. The Supreme Court ruled that the practice of not fully indexing a pensioner’s pension but simply adding UAH 100-135 annually was unlawful.

The court ordered the Pension Fund to fully index the plaintiff’s pension, thus setting a precedent. This means that now pensioners who retired after 2019 and whose pensions were calculated at a lower rate can safely apply to the Pension Fund for recalculation. Who can count on a pension increase and how – we analyzed [Kommersant].

The Supreme Court has put an end to the dispute

In June 2024, one of the pensioners filed a lawsuit against the Main Department of the Pension Fund of Ukraine in Donetsk Oblast (PF), in which he asked

to recognize as unlawful the actions of the Pension Fund in refusing to index the pension using the coefficients of increase of the average wage (income) in Ukraine, from which insurance contributions taken into account for calculating the pension, in the amount of 1.14, 1.197 and 1.0796;
to oblige the Pension Fund to recalculate (indexation) and pay pensions in accordance with part two of Article 42 of the Law of Ukraine “On Compulsory State Pension Insurance” dated July 09, 2003 No. 1058-IV (hereinafter – Law No. 1058-IV) by consistently increasing the average wage (income) in Ukraine from which insurance contributions were paid, and in this regard to pay the shortfall in pension amounts starting from March 1, 2022.

In support of his claim, the plaintiff stated that he had been registered with the Pension Fund and had been receiving an old-age pension since March 4, 2021. The plaintiff applied to the defendant for pension indexation, but received a response that he was not entitled to indexation.

However, the courts of first instance sided with the defendant. In dismissing the claim, the court of first instance, whose conclusions were upheld by the court of appeal, stated that the Pension Fund had rightfully refused to index the plaintiff’s pension using the coefficient of increase in the average salary (income) for 2018-2020. Referring to a number of resolutions of the Cabinet of Ministers, the courts ruled that pensions that have already been granted using an average salary that exceeds the indexed calculation are not subject to annual indexation according to the formula. In such cases, a fixed monthly supplement is provided instead of indexation.

But the pensioner did not accept this and appealed to the Supreme Court. Having considered the pensioner’s arguments, the court found the actions of the Main Department of the Pension Fund of Ukraine in Donetsk Oblast to be unlawful and ordered to satisfy the pensioner’s claims – to index the pension using the coefficients of increase in the average salary (income) in Ukraine for 2018-2020, from which insurance contributions were paid, in the amount of 1.14, 1.197 and 1.0796, and in this regard to recalculate and pay the pension starting from December 06, 2023.

Pensioners storm the courts

From now on, the courts must take this decision of the Supreme Court into account as a legal position binding on similar cases. This means that decisions in similar cases (payment of pensions after 2019 without taking into account the indexation coefficient) will be made in favor of the pensioner. And pensioners are already applying to the courts en masse for pension indexation, according to [Kommersant] in the law firm Ares Law Firm.

“In fact, everyone who retired after 2019 is being indexed incorrectly. The amount of indexation depends on the size of the pension, length of service, salary and the period for which it was not increased. This is an individual issue. But what will depend on the court is the period for which the recalculation will be made. Some courts decide to recalculate for the last six months, and some – for the entire period starting from the day of retirement,” explains lawyer Vladyslav Zaitsev.

Millions of Ukrainian pensioners are already storming the courts. Despite the fact that many of them have gone to court before to recalculate their pensions, but were denied. And now they are getting positive decisions. By the way, as it became known [Kommersant] from the Ministry of Social Policy, the government deliberately did not index the “new” pensions to reduce the gap between the pensions of those who retired with a minimum of UAH 4-5 thousand and those who retired when it was already UAH 9 thousand or more.

Author: Alla Dunina

Марина Максенко

Editor