Statement of G7 Ambassadors in support of the pension reform in Ukraine

G7 Bild vergrößern Die Flaggen der G7-Staaten Deutschland, Frankreich, Grossbritannien ( England / UK ), Italien, Japan, Kanada, USA. (© Michael Gottschalk/photothek.net) 07.07.2017

We, the G7 Ambassadors, wish to express our strong support for the pension reform plan proposed by the Ukrainian government, and we call on the Rada to adopt the legislation without delay during its plenary session next week. Pension reform is one of the greatest challenges for any government, and we commend Ukraine’s leaders for undertaking this overdue reform with political courage and vision.

Today, pensioners in Ukraine represent more than one fourth of the population; while average pensions are extremely low, Ukraine pension spending – totaling 11 percent of GDP - is among the highest in Europe. This discrepancy speaks volumes about the need to restore a proper social contract between the State and its citizens, and to swiftly adopt a pension reform that improves the fairness, predictability, and sustainability of the system.

We believe that the pension reform proposed by the Government, which was developed in close cooperation with the IMF and World Bank, meets these objectives. The draft law foresees a more
transparent and fairer pension calculation formula that more closely ties pension benefits to pension contributions and improves the adequacy of pensions. The reform also establishes a flexible retirement age, linked to the length of the formal career of an individual and incentivizing participation in the system. The proposed reform will also generate fiscal savings by improving the accounting and sustainability of the Pension Fund and Ukraine’s overall state budget.

As hard-working Ukrainians contribute to the development of their country, they deserve to receive the security of a pension system that adequately rewards that work. At the same time, the country’s fiscal sustainability needs to be reinforced. We believe the proposed reform strikes the right balance between these goals. It is now the responsibility of all the elected parliamentarians to ensure that this reform is approved and implemented, providing a better future for present and future generations of Ukraine.