Statement of G7 Ambassadors in support of the pension reform in Ukraine [uk]

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.