Transition from a preferential pension to an old-age pension

According to Article 10 of the Law of Ukraine “On Compulsory State Pension Insurance”, a person entitled to various types of pensions is assigned one of them. But the important thing here is that the person himself chooses for himself the type of pension that he considers appropriate. And also, if a pensioner has such a desire, he can change one type of pension to another. Therefore, a person has the opportunity to choose exactly the pension option that he sees as more profitable for himself.

What should you know about the legislative regulation of this issue?

Part 3 Art. 45 of the mentioned law provides that the average salary or income determined by Article 40 for granting a pension for 3 calendar years before dismissal applies only in the case when there is a transition from one type of pension to another. Or this happens when a pension is assigned for the first time. At the same time, it is very important that pensions on preferential terms are assigned precisely on the basis of the Law “On Pensions”.

What problem often occurs in practice?

Logically, the Pension Fund authorities should be on the side of the pensioner and help ensure that he can receive adequate support without any problems or complications. In practice it often turns out differently. A person faces artificially created difficulties and violation of his rights. Even the practice of administrative proceedings indicates that the majority of lawsuits are filed in cases where the Pension Fund is the defendant.

When the Pension Fund authorities transfer from one type of pension to another, they often do not use the salary or income of the pensioner 3 years before dismissal when calculating. By doing this they violate his rights.

To better understand how this works, let’s look at a specific example:

• Let’s imagine a pensioner whose long-service pension was assigned until December 31, 2017 or whose pension was recalculated.
• The Pension Fund applies an indexed indicator of the average salary or income per 1 insured person in Ukraine as a whole for 2014, 2015 and 2016.
• The calculation is made as follows: UAH 3,764.40 x 1.17 x 1.11 x 1.11 x 1.14 x 1.197 = UAH 7,405.03 (as of March 2023).

When a pensioner switches to an old-age pension in accordance with Law № 1058-IV, this indicator remains unchanged. Consequently, to calculate the amount of the old-age pension, multiplication is carried out by the individual coefficients of wages and length of service.

As for the “new” assignment of an old-age pension (take, for example, the cases of 2023), the average salary or income per 1 insured person in Ukraine as a whole for 2020, 2021 and 2022 is used. Accordingly, the size will be 12 236.71 hryvnia.

What does judicial practice indicate?

The Supreme Court has repeatedly concluded the following: when a transfer occurs from a long-service pension to an old-age pension, this cannot be considered a transfer within the scope of Law № 1058-IV alone. The reason is that this legal act provides for 3 types of pensions – for disability, age and loss of a breadwinner. A long-service pension is assigned in accordance with the Law “On Pensions”. That is why its purpose should be considered primary, and not a transfer from one type to another. And therefore, it is necessary to apply the indicator of the average salary per 1 person insured in Ukraine, which preceded 3 years before dismissal.

To explain this in simpler terms, the Ukrainian court in this case acts in the interests of the pensioner and helps to receive a higher pension.

How can we be useful?

Lawyers at the Prikhodko & Partners law office effectively help their clients by representing their interests in court. Unfortunately, as practice shows, it is not possible to achieve results in such cases in any other way than through the courts. And it is a binding court decision that obliges the Pension Fund to award the pensioner a pension in the amount he is entitled to receive.

Our team also specializes in pension law. We deal with such requests regularly and know that these cases are winning cases. Fill out the form on our website and our pension recalculation lawyer will contact you shortly.