A Proposed New System for Pension Indexation
Ukrainian pension lawyer Mykhailo Vulakh has put forward a new model for indexing pensions, linking them directly to the average salary figure calculated by the Pension Fund. His analysis suggests this change could lead to a significant 16.1% increase in pension payments. Vulakh argues that since the Pension Fund calculates this average salary annually for new retirees, the same data should be applied to adjust payments for existing pensioners, who are entitled to the same consideration.
Average Salary Data for Pension Calculation
According to official figures, the average salary used for pension calculations was 15,507 UAH in 2025 and rose to 17,482 UAH in 2026. This represents a 16.1% increase between those years, which Vulakh believes could substantially improve pensioners' financial well-being if used for indexation.
“There's no need to invent formulas with 50% this or that. Everything is already there—we simply need to use it for existing pensioners. They are the same people.” - Mykhailo Vulakh
Vulakh further emphasized that “this math is accessible to any Pension Fund employee or member of parliament,” highlighting the perceived simplicity of implementing his proposal. This new approach to pension indexation could therefore mark a significant step in strengthening Ukraine's social safety net. Pension reform is a persistent topic in Ukraine, where payments often lag behind inflation and living costs.
The proposed indexation mechanism has the potential to markedly improve retirees' financial security, as it would tie pension growth to changes in the average wage, which more accurately reflects the real state of the economy. Aligning pensions with average salary trends could increase income for many Ukrainian pensioners, a crucial aspect of state social policy, particularly amid ongoing economic challenges.
As discussions around pension reforms continue, it's essential to understand the current limitations of the system. For instance, the recent increase in pensions for 2026 has been capped at 2,595 Hryvnias, raising questions about the adequacy of this adjustment. To explore the implications of this limitation and its impact on retirees, you can read more about the reasons behind the cap on pension increases here.