Pensions 2025: When and by how much could payments increase?
Social Protection During War: Will Pension Payments to Ukrainians Be Stopped?
Pension recalculations in Ukraine will proceed even if the full-scale war continues throughout 2025. According to Prime Minister Denys Shmyhal, the government will maintain all social payments, and a new pension indexation is scheduled for March 2025. As stated by Shmyhal, inflation at the year’s end remains moderate, while the economy is gradually recovering from the downturn.
According to the approved state budget for 2025, 420.9 billion UAH is allocated for social protection, which includes support for pensioners (specifically, pension indexation starting March 1, 2025).
As per the approved state budget for 2025, the allocation for social protection is 420.9 billion UAH, covering support for pensioners (including pension indexation from March 1, 2025), low-income families, and individuals with disabilities. Of this amount, transfers to the Pension Fund will total 236.9 billion UAH, while benefits and subsidies will account for 42.3 billion UAH.
"One of the priority areas of the 2025 budget expenditures remains social needs. However, the budget for the next year includes a slight reduction in these expenditures," commented economist Alexandra Mironenko from the Center for Economic Strategy.
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"The largest item of social spending is pension provision and increases. These funds are redirected from the state budget to the Pension Fund budget. A reduction of 13% to 237 billion UAH is planned for this item in 2025. However, the final revenue amount of the Fund remains unchanged due to higher planned contributions from the Unified Social Contribution (USC). Thus, the contribution from the state budget to the revenue structure decreases, enhancing the Fund's financial independence. The Fund's own revenues are expected to slightly increase in 2025, projected at 579.5 billion UAH," explained Alexandra Mironenko.
Pension Amounts in Ukraine: Who Will Definitely See an Increase?
According to data from the Pension Fund, as of October, pensions were being paid to 10.34 million pensioners in Ukraine.
- 43% receive up to 4,000 UAH (less than 100 dollars) per month, with more than half receiving up to 3,000 UAH;
- 25% have pensions ranging from 5,000 to 10,000 UAH per month;
- 12% receive more than 10,000 UAH.
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The average pension in the country stands at 5,851 UAH (around 140 dollars).
As stated by Minister of Social Policy Oksana Zholnovich during a broadcast on October 18, the pension increases will primarily affect citizens who have been retired for a long time.
"Everyone will receive an increase. This will depend on the amount of the unified social contribution being paid and years of service," Zholnovich noted, adding that larger pensions will not be cut.
It should be noted that the Ministry of Social Policy of Ukraine has long believed that the pension amount situation can be improved for 80% of current and future pensioners by increasing payments and simplifying calculations.
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Pension Indexation 2025: How Will Increases Be Implemented and Who Is Excluded?
While the exact figures for potential pension increases will be revealed only after the new year, according to the draft state budget for 2025, the minimum pension in Ukraine will remain at the 2024 level (2,361 UAH), and recalculations will depend on inflation in the country and the growth of wages from which the USC is paid. Thus, the March indexation will only affect pension payments without considering additional benefits.
The Pension Fund publishes statistics on the average salary from which the USC is paid, and a significant increase occurred in the second quarter of 2024. Therefore, it is quite possible that pensions in Ukraine will rise by 10-12%. Last year, this figure was around 6%.
The March indexation will only affect pension payments without considering additional benefits.
At the same time, the minimum and maximum permissible amounts for additional payments after the indexation will be 100 and 1,500 UAH, respectively.
It is important to note that the indexation does not apply to those who have received their pension in the last few years, as their payments are considered current.
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Who May Have Their Pension Withdrawn?
In certain cases, pensions may be confiscated. According to Article 41 of the 2025 budget draft, the government proposes to withdraw funds from the bank accounts of pensioners who are internally displaced persons (IDPs) if these accounts have not been used for a year, or if the IDP pensioner has not undergone identification. Therefore, Oschadbank may transfer the remaining funds in the pension accounts of IDPs, opened in this bank, back to the Pension Fund.
Oschadbank may transfer the remaining funds in the pension accounts of IDPs, opened in this bank, back to the Pension Fund.
This applies to the accounts of pensioners-IDPs registered before February 24, 2022, if:
- there have been no transactions (withdrawals, non-cash payments, or transfers) in the pensioners' accounts for a year;
- pensioners have not undergone physical identification within six months.
According to government regulations, pension accounts for these IDPs were only opened in Oschadbank, so there are no corresponding unused fund balances in other banks. However, funds will not be withdrawn from the accounts if they are under arrest or other encumbrances.
Nevertheless, if a displaced person decides to contact the Pension Fund or Oschadbank after the funds are withdrawn from their pension accounts, the state will resume pension payments to that individual.
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Pension Reform in Ukraine: What Lies Ahead for Pensions?
According to the draft law from the Ministry of Social Policy, which has not yet been submitted to parliament but has been made public for discussion, a radical overhaul of pensions is planned. Specifically, the following changes are proposed:
- the solidarity level of the pension system: the payment will consist of two components: an insurance part (currently received by pensioners in Ukraine) and a basic pension;
- individuals who do not have sufficient work experience by age 65 but have accumulated a certain number of points (which will depend on salary levels) will be able to retire;
- the calculation of the insurance payment amount will be completely revised;
- the introduction of a mandatory accumulative level in the pension system.
Additionally, the changes proposed by the government aim to "increase fairness and adequacy of pension amounts." In particular, the reform is designed to simplify pension calculations and link them to the amount of insurance contributions.
"Regarding the future of the accumulative level of the pension system, we believe that the risks of implementation are too high. First — the completion of the war, stabilization of the economy and rule of law, and then — long-term hryvnia savings for citizens," added Alexandra Mironenko.
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Pension Indexation Despite War: What Experts Say
"The Ministry of Social Policy emphasizes that pension indexation will occur in 2025, despite a reduction in fund transfers from the state budget. The actual amount of Pension Fund expenditures will be known once its budget for the next year is approved," said Alexandra Mironenko.
According to forecasts from international and Ukrainian economists and authorities, the budget deficit for 2025 in Ukraine is expected to decrease to 38 billion dollars from 44 billion dollars in 2024. The total financing requirement may reach 52 billion dollars (last year it was 56 billion dollars). And this will primarily be covered by funds from the EU Fund for Ukraine, as well as loans from the G7, proceeds from frozen Russian assets, and similar sources.
The timeliness of state payments entirely depends on the regularity of financial support from Ukraine's partners and donors.
Moreover, analysts do not believe that the full-scale war will end in 2025. The timeliness of state payments entirely depends on the regularity of financial support from Ukraine's partners and donors.
"If you look at the latest statistics from the National Bank of Ukraine, you will see that inflation is currently over 11%. This means consumer prices are rising. Their increase is accounted for in next year's budget. This is normal practice: prices rise, inflation exists. Yes, there are mechanisms to combat it. This inflation level is quite high compared to the targeted levels expected in Ukraine — 4-5%. It is much better