Switching from a Pension for Years of Service to an Old-Age Pension in Ukraine
Current Ukrainian legislation provides for several types of pensions, including old-age pensions, pensions for years of service, disability pensions, and survivor’s pensions. Each type of pension differs both in terms of eligibility requirements and the amount of pension benefits. Pensioners also have the right to switch from one type of pension to another, particularly where switching to a new type of pension results in a higher pension amount. This situation most commonly arises when a person switches from a pension for years of service to an old-age pension. The increase may result from the application of a new indicator of the average salary in Ukraine for the three preceding years. However, the Pension Fund authorities often refuse to apply the new indicator, arguing that such recalculation is not provided for by applicable legislation.
This was exactly the situation faced by Ms. Havryk, who had been receiving a pension for years of service since 2017 and applied to switch to an old-age pension in 2022. However, her pension did not increase, and she therefore contacted us for legal assistance. After analyzing her pension file, we discovered that when she was transferred to an old-age pension, the Pension Fund failed to apply the average salary indicator in Ukraine for 2019–2021. According to our calculations, as a result, Ms. Havryk had been underpaid by more than UAH 2,000 every month since 2022. In view of these unlawful actions, we prepared and filed a lawsuit based on the following legal arguments.
Law of Ukraine No. 1058-IV (Part 3 of Article 45) establishes the procedure for switching from one type of pension granted under this Law to another type of pension under the same Law. In such a case, the average salary indicator used when switching to another type of pension must remain unchanged, meaning that the indicator applicable at the time the pension under Law No. 1058-IV was originally granted continues to apply. Therefore, the key issue in this case was whether the pension for years of service and the old-age pension had been granted under different laws.
As established during the court proceedings, Ms. Havryk’s pension for years of service had been granted under Law of Ukraine No. 1788-XII, while her old-age pension was granted under Law of Ukraine No. 1058-IV. Accordingly, this was not merely a transfer from one type of pension to another under the same law, but rather the granting of a new pension under a different law. Therefore, the average salary indicator for the three calendar years preceding the year in which the new type of pension — the old-age pension — was granted had to be applied.
Since a new pension was effectively granted, the calculation of the old-age pension must use the average salary (income) in Ukraine from which insurance contributions were paid for the three calendar years preceding the year in which the person applied for the pension (Part 2 of Article 40 of Law No. 1058-IV).
A similar legal position concerning the application of these provisions in comparable legal relationships was set out in the judgment of the Supreme Court of Ukraine dated 29 November 2016 (Case No. 133/476/15-a), the judgment of the Grand Chamber of the Supreme Court dated 31 October 2018 (Case No. 876/5312/17, Proceedings No. 11-731app18), and the judgment of the Supreme Court dated 13 February 2019 (Case No. 265/7301/16-a).
The court of first instance fully agreed with our arguments and granted the claim. The court ordered the Pension Fund to recalculate Ms. Havryk’s old-age pension from 2022 using the average salary (income) indicator in Ukraine for 2019–2021. The Pension Fund did not file an appeal, and therefore the judgment entered into force 30 days after it was issued.
The Pension Fund subsequently complied with the court judgment relatively quickly. It recalculated the pension and paid the outstanding pension arrears in full, representing the difference between the pension that should have been paid and the amount actually paid since 2022. As a result, Ms. Havryk’s pension rights were restored, and she finally began receiving her pension in the correct amount.
The court judgment is available at the following link: https://reyestr.court.gov.ua/Review/115035762.
