Pension Indexation in Ukraine: How We Won a Case Against the Pension Fund

Pension indexation is an issue that gives rise to numerous disputes between pensioners and the Pension Fund authorities every year. Although the law expressly provides that, from 1 March of each year, the average salary indicator used when the pension was initially awarded must be increased, in practice the pension authorities often either apply the average salary indicator for 2014–2016 or replace the proper indexation with fixed additional payments of UAH 100–135. This is exactly the situation faced by our client, Mr Kyrylov, an old-age pensioner whose pension was awarded in 2021.

After the Supreme Court issued its decision in case No. 160/28752/23 in January 2025, clearly finding the practice of the Pension Fund authorities of replacing pension indexation with fixed additional payments to be unlawful, Mr Kyrylov decided to have his pension file reviewed. An analysis of the documents immediately revealed violations: in 2022, 2023 and 2024, instead of applying the respective increase coefficients of 1.14, 1.197 and 1.0796, the Pension Fund of Ukraine granted him additional payments of UAH 135 and UAH 100. Moreover, in 2025, instead of applying the coefficient of 1.115 established by the Government, the Pension Fund applied only a reduced coefficient of 1.0575, which constitutes a direct violation of Law No. 1058. As a result, the average salary indicator that should have been increased annually remained effectively unchanged, leading to a significant understatement of his pension.

After analysing the documents, we submitted an application for pension recalculation to the pension authority. However, the application was rejected on the grounds that indexation should allegedly be calculated using the average salary indicator for 2014–2016. While preparing the court claim, we carried out our own calculation, which demonstrated that if the correct increase coefficients had been applied, Mr Kyrylov’s pension would have been approximately UAH 3,000 higher than the amount he was actually receiving.

In court, we established several key facts.

Firstly, pension indexation must be applied to the average salary indicator that was used when the pension was initially awarded. Since Mr Kyrylov retired in 2021, the relevant average salary indicator for 2018–2020 should be used.

Secondly, the law does not provide any legal grounds for replacing pension indexation with fixed additional payments. The provisions of the resolutions of the Cabinet of Ministers of Ukraine establishing such additional payments conflict with the provisions of the law.

Thirdly, the defendant’s reliance on Procedure No. 124 was unfounded, as the Supreme Court expressly determined that the provisions of this Procedure may be applied only to the extent that they do not contradict the law, while the law requires the use of the individual salary indicator applicable to the particular pensioner.

The court of first instance fully granted the claim, declared the Pension Fund’s refusal unlawful and ordered a full recalculation of the pension starting from March 2022 and for each subsequent year through 2025. The appellate court upheld the judgment, confirming that the Pension Fund had acted unlawfully and that the fixed additional payments constituted an unlawful substitute for proper pension indexation.

This judgment is of significant practical importance. It demonstrates that a pensioner whose pension was awarded from 2018 onwards may be entitled to indexation based on the average salary indicator applicable specifically to their pension rather than the outdated average salary data for 2014–2016.

As Mr Kyrylov’s case demonstrates, even where the pension authority has disregarded statutory requirements for years, pension rights can be effectively protected through the courts, and judicial practice provides mechanisms for restoring the pensioner’s violated rights.

The court decisions are available at the following links:

Court of First Instance – https://reyestr.court.gov.ua/Review/127835605

Court of Appeal – https://reyestr.court.gov.ua/Review/129944757