UN in Ukraine launched a Policy Paper on social protection with a focus on pensions within a high-level international conference

This document – recommendatory in nature, belongs to series of policy papers on key issues for Ukraine, developed by UN and intended to provide policy recommendations for the government of Ukraine and other relevant stakeholders such as civil society, private sector, to improve the social protection system.

The online conference took place within the series of Hernan Santa Cruz Dialogues, held by UN in countries across the globe, aimed to raise awareness and stimulate discussions to advance the realization of socio-economic rights in national settings to enhance economic, social and cultural rights and the right to development. The online event was joined by high-level guests both from the Ukraine’s Government and the global UN organizations, to initiate a national dialogue on social protection in Ukraine, with a specific focus on the pension reform to spur national debate and encourage policymaking in line with the UN global best practices, outlining policy recommendations specific for Ukraine.

Ms. Osnat Lubrani, UN Resident and Humanitarian Coordinator in Ukraine, in particular, explained the importance of developing such set of recommendations on pensions, in view of the current situation in Ukraine:

“The ‘pension’ policy paper underlines significant avenues for improving Ukraine’s social protection system, especially in times of COVID-19 that did reveal limitations of the existing social security system as, for instance, workers in the informal economy fell out from coverage by the existing schemes. During previous months the UN discussed with the Government of Ukraine recently adopted National Economic Strategy 2030, that places significant emphasis on the long-discussed pension reform. That is why we decided to focus today on pensions and contribute UN expertise and recommendations to hopefully inform the planned national reform. Today we need to discuss the important steps that should be implemented in order to take into consideration in the course of the pension and social protection reform.”

Pensioners, who are one of the most vulnerable group in Ukraine, today are making 27% of the total population (11 million people). 80% of them receive pensions below the subsistence budget, while 20% of pensioners (above 2 million) have disabilities and require additional assistance.

Ms. Maryna Lazebna, Minister of Social Policy of Ukraine raised the crucial issues regarding pension protection in Ukraine:

"Majority of the people receive low pensions, and it is definitely a matter of justice. Today, almost 60% of our pensioners receive a pension below 3,000 hryvnias. In 2003, a three-tier pension system was introduced in Ukraine, i.e. corresponding laws were adopted. Solidarity system, existing today in the country - it works. Accumulative one, the second level, was not introduced in the country, only the voluntary level works, and again, due to the lack of attention of the authorities to this level, we are facing the fact that only 9% of the number of insured persons use voluntary accumulations which is about 1 million people. This is very low numbers and it also exposes a lack of efforts by the government, insufficient attention of the government to the development of voluntary accumulations," - said the Minister.

Ms. Lazebna also reminded that currently in Ukraine 13 million working Ukrainians pay contributions to the Pension Fund of Ukraine in favor of 11 million pensioners.

In her turn, Ms. Michelle Bachelet, UN High Commissioner for Human Rights reiterated that Social protection is a fundamental human right and an essential tool for reducing poverty: “Taking immediate steps to build a better, more comprehensive social protection system is crucial to providing immediate, life-changing assistance – and to longer-term recovery from this crisis”.

Pensioners in the non-government controlled areas (NGCA) in eastern Ukraine have had particular problems accessing their pensions as they need to travel to the GCA to access them. By 2019, some 600,000 pensioners in NGCA had lost access to their pensions due to movement restrictions and complex administrative requirements.

“It is essential that older people who are internally displaced, or whose lives have been otherwise impacted by the conflict, be able to access the pensions which are their right. – continued Ms. Bachelet - Human rights analysis can help reforms address the multiple dimensions of discrimination and inequality that generate poverty – and can provide practical guidance to make people and their well-being the priority. The UN policy paper on social protection, which is being issued today, is one such tool”.

In 2020, a further 270,000 NGCA residents have been unable to make their pension withdrawals inside the GCA due to restrictions on crossing the line of contact. Yet, these pensions are vital for humanitarian reasons and important for the purpose of peacebuilding and social cohesion.

During the conference the ILO Director-General Mr. Guy Ryder outlined his vision for achieving better social protection in Ukraine: “Ukraine is now facing a crucial choice in deciding the future of its pension system. To create a solid pension system, all key stakeholders – the Government, trade unions and employers – must be willing to negotiate. International Labour Standards can provide clear guidance on how to consolidate a better system. At the ILO, we will support all your efforts to achieve comprehensive and sustainable social protection for all. We’ll be there every step of the way to make sure Ukraine can build a better future for all its citizens”.

UN Resident Coordinator in Ukraine also expressed concern that in relatively near future Ukraine may face significant economic cost due to demographic decline. Ukraine’s population is projected to fall by 20% by 2050, with a significant increase in the 65+ population, noted Ms Lubrani. The expected sharp increase in the age-dependency ratio, puts pension system sustainability at significant risk. Beyond necessary pension reform, labor policies need to significantly improve to allow investment in life-long learning and continuous improvement of meaningful employment opportunities.

The Dialogues, one of which took place today in Ukraine, are based on the vision and mission of Chilean delegate to the UN Hernán Santa Cruz, one of the authors of the Universal Declaration of Human Rights. Ukraine is the 2nd country in the world to organize such dialogue and addresses the right to social security and, in particular, the pension reform.

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For media inquiries please contact: Olena Laba, UN Ukraine Public Information Officer: olena.laba@un.org (tel. +38063405-85-20).