According to this new model, an individual's pension amount is determined by the total insurance contributions they have made throughout their working life, rather than based on their previous work experience.
Previously, before the 2004 reform, Ukraine's pension system was a complex structure based on labor pensions. It included various categories, such as pensions for retirees, disability pensions for those unable to work, survivor pensions for families of deceased workers, and pensions for length of service for certain specialists.
Additionally, social pensions were available for individuals who did not have the required work experience.
A significant turning point in pension policy was the adoption of Law No. 1058-IV on July 9, 2003, which came into effect in 2004. This reform altered the structure of pension provision, creating a new system with three key components designed to meet modern social security standards.
Currently, the revised system focuses on three main types of pensions: old-age, disability, and survivor pensions. A defining feature of the new system is that the amount a person will receive in pension payments is directly linked to the insurance contributions made during their working years.
It is crucial for both current and future retirees to understand that pensions are no longer solely based on work experience but on the insurance contributions made throughout their careers. This change necessitates greater attention and responsibility when making insurance contributions to ensure adequate pension provision.
This updated pension system aligns with global trends, transitioning to an insurance-based model that is more transparent and equitable, aimed at strengthening the social security system for all citizens.