Switching from a Civil Servant’s Pension to an Old-Age Pension in Ukraine
Current Ukrainian legislation provides for several types of pensions: old-age pensions, long-service pensions, disability pensions, and survivor’s pensions. Each type has its own eligibility requirements and rules for determining the amount of pension payments. A pensioner also has the right to switch from one type of pension to another if doing so results in a higher pension. This situation most commonly arises when a person switches from a long-service pension to an old-age pension. In such cases, an increase in the pension amount may result from applying a new national average salary indicator for the three preceding calendar years. However, the Pension Fund authorities generally do not apply this updated indicator, taking the position that the applicable legislation does not provide for such an approach.
A similar situation occurred with Ms Kuznik, who had been receiving a civil servant’s pension since 2011 and switched to an old-age pension in 2021. However, her pension did not increase after the switch, so she contacted us for legal assistance. After analysing her pension file, we established that the Pension Fund had failed to apply the national average salary indicator for 2018–2020 when recalculating her pension. In addition, the Pension Fund had incorrectly indexed her pension. As a result, according to our calculations, Ms Kuznik had been receiving approximately UAH 7,000 less per month than she was entitled to since 2021. Given these unlawful actions, we prepared and filed a court claim with the relevant legal arguments.
Firstly, Article 45 of Law No. 1058-IV establishes the procedure for switching from one type of pension granted under that Law to another type of pension also granted under Law No. 1058-IV.
Accordingly, when switching between different types of pensions governed by Law No. 1058-IV, the average salary indicator used for pension calculation generally remains unchanged, meaning that the indicator applicable at the time the pension under Law No. 1058-IV was initially granted continues to apply.
However, as established during the court proceedings, Ms Kuznik’s civil servant’s pension had been granted under Law No. 3723-XII, while her old-age pension was granted under Law No. 1058-IV. Therefore, this was not merely a switch between two types of pensions under the same law, but rather the granting of a different pension under a different law. Consequently, 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.
When Ms Kuznik’s previous pension was calculated, the average salary (income) indicator in Ukraine had not been used. Therefore, when calculating her old-age pension in 2021, this indicator had to be applied for the first time. Accordingly, the applicable indicator was the average salary for the three calendar years preceding the granting of the old-age pension in 2021.
Secondly, it was established that the pension authority had indexed the pension by increasing the average salary indicator in Ukraine for 2014–2016 by multiplying it by the relevant increase coefficients (1.17 * 1.11 * 1.11 * 1.14 * 1.197 * 1.0796 * 1.115).
At the same time, part 2 of Article 42 of Law No. 1058-IV provides that, in order to ensure pension indexation, previously granted pensions must be recalculated annually from 1 March by increasing the average salary (income) indicator in Ukraine from which insurance contributions were paid and which is used to calculate the pension.
Neither Article 42 of Law No. 1058-IV nor Procedure No. 124 contains any provision stating that pensions granted at a later date must be indexed on the basis of the average salary indicator applicable as of 1 October 2017.
Moreover, Procedure No. 124 may be applied only to the extent that its provisions do not contradict the Law of Ukraine “On Compulsory State Pension Insurance”.
The Supreme Court reached a similar conclusion in its judgment dated 13 January 2025 in case No. 160/28752/23.
Therefore, when calculating Ms Kuznik’s old-age pension, the average salary (income) indicator in Ukraine from which insurance contributions were paid for the three calendar years preceding the year of retirement — 2018–2020 — should have been applied. This indicator amounted to UAH 9,118.81 and should have been multiplied by the relevant increase coefficients for 2022–2025 (1.14; 1.197; 1.0796; and 1.115).
The court of first instance granted the claim in full. In particular, it annulled the decision refusing the proper pension calculation and ordered the pension authority to recalculate Ms Kuznik’s old-age pension from 2021 using the average salary (income) indicator in Ukraine for 2018–2020, taking into account the applicable pension indexation.
The Pension Fund disagreed with the judgment and filed an appeal. The appellate court once again supported our principal legal arguments but overturned the judgment insofar as it required the Pension Fund to recalculate the pension for the previous period. Nevertheless, the main conclusion remained unchanged: the Pension Fund is required to carry out the proper recalculation of the pension.
The court decisions are available at the following links:
Court of First Instance – https://reyestr.court.gov.ua/Review/128573763;
Court of Appeal – https://reyestr.court.gov.ua/Review/130211880.
