Incorrect Pension Indexation in Ukraine: How to Increase Your Pension Through Court

Almost every pensioner in Ukraine is probably aware that, starting from 2019, the Cabinet of Ministers of Ukraine has conducted annual indexation of most types of pensions, generally beginning in March. The indexation mechanism involves increasing the indicator of the average salary (income) in Ukraine from which insurance contributions were paid and which was used to calculate the pension, by applying the relevant coefficient established by the Government. As a result, pension payments are increased in accordance with the applicable indexation rules.

We provide legal services aimed at increasing pensions through court proceedings where pension indexation has been calculated incorrectly. 

In general, pension indexation is intended to maintain the purchasing power of pensioners by adjusting pension payments in line with inflation and growth in the average salary. However, in the case of pensioners whose pensions were granted starting from 2020, the Pension Fund authorities applied a different approach to indexation, providing limited fixed monthly increases instead of applying the relevant coefficient to increase the average salary indicator used to calculate the pension. As a result, many pensioners did not receive the pension increase they believed they were entitled to under the law.

This situation resulted in numerous pensioners bringing claims before the administrative courts. However, judicial practice was not uniform: some courts granted such claims and ordered the Pension Fund to conduct indexation using the appropriate coefficients, while others supported the position of the Pension Fund.

This legal uncertainty continued until the Supreme Court considered case No. 160/28752/23 in its judgment dated 13 January 2025 concerning the recalculation of pensions granted from 2020 onwards in connection with annual indexation. In particular, the Court considered whether it was lawful for the Pension Fund to provide fixed indexation-related supplements of UAH 100/135 starting from 2021 instead of applying the relevant increase coefficients.

In this case, the Supreme Court reached important conclusions concerning the proper indexation of pensions granted from 2020 onwards.

First, the provisions of the Procedure for Recalculation of Pensions pursuant to part 2 of Article 42 of the Law of Ukraine “On Compulsory State Pension Insurance,” approved by Resolution of the Cabinet of Ministers of Ukraine No. 124 dated 20 February 2019 “On Pension Indexation in 2019,” are not fully consistent with part 2 of Article 42 of the Law of Ukraine “On Compulsory State Pension Insurance,” since they differently define the indicator to which the relevant increase coefficients are to be applied.

Second, the first and second paragraphs of clause 5 of Procedure No. 124 must be applied in accordance with part 2 of Article 42 of the Law of Ukraine “On Compulsory State Pension Insurance.” Accordingly, when conducting pension indexation, the relevant calculation should be based on the average salary (income) indicator in Ukraine from which insurance contributions were paid and which was taken into account when the pension was originally calculated.

Third, when recalculating pensions granted in 2020–2023 under the Law of Ukraine “On Compulsory State Pension Insurance” in connection with annual indexation, the average salary (income) indicator in Ukraine from which insurance contributions were paid and which was used to calculate the pension is subject to increase, as provided by part 2 of Article 42 of the Law of Ukraine “On Compulsory State Pension Insurance.”

Fourth, the Supreme Court concluded that the Main Department of the Pension Fund, when recalculating the pension under part 2 of Article 42 of the Law of Ukraine “On Compulsory State Pension Insurance,” acted inconsistently with the requirements of the applicable legislation by establishing a monthly pension supplement of UAH 135.00 in 2022 and UAH 100.00 in 2023 instead of applying the increase coefficients of 1.14 and 1.197 respectively to the average salary (income) indicator in Ukraine from which insurance contributions had been paid and which had been directly used to calculate the pension.

Therefore, taking into account this position of the Supreme Court, pensioners whose pensions were indexed using fixed supplements instead of the relevant increase coefficients may have grounds to challenge the Pension Fund’s calculations in court and seek proper pension indexation based on the average salary indicator used to calculate their pension.

Sincerely, the Pension Center team. Call us at +38 (066) 368-65-59.