Ukrainian Pensions to Increase by 12% Starting March 1: How the New Indexing Figure Was Calculated

Indexation of Pensions and Insurance Payments in Ukraine

According to Пенсії (RSS): The Cabinet of Ministers of Ukraine has approved a decision to index pensions and insurance payments, effective March 1, 2026. Approved on February 25, 2026, under decree number 236, the measure will apply an indexation coefficient of 1.121, resulting in a 12.1% increase. This annual adjustment is a standard mechanism to protect pensioners' incomes from inflation and wage growth.

Each year, the calculation for pensions will incorporate a coefficient derived from a specific formula. This formula accounts for two key economic indicators: 50% of the previous year's consumer price growth and 50% of the average salary growth over the preceding three calendar years.

The Formula for Determining the Indexation Coefficient

The formula for calculating the indexation coefficient was established by the Cabinet of Ministers of Ukraine in decree No. 124, dated February 20, 2019. It is structured as follows:

K = (CPI + ASI) × 50% / 100% + 1, where CPI is the consumer price index growth for the previous year (in percent), and ASI is the average salary (income) index growth in Ukraine, on which insurance contributions were paid (in percent).

These changes to the pension system are designed to support the population amidst economic challenges and rising inflation. The indexation of pensions and insurance payments is a crucial step for ensuring social stability in Ukraine, particularly given persistent inflationary pressures. Implementing this coefficient aims to preserve the purchasing power of pensioners and other social benefit recipients, which should positively impact their financial well-being. It also reflects the government's commitment to supporting vulnerable segments of society during periods of economic uncertainty.