Can the Pension Fund Reduce a Military Pension from 90% to 70%?

Every pensioner would naturally like to see their pension increase. However, there are situations where, following a recalculation, the amount of a pension does not increase but actually decreases. In such circumstances, it is important to determine whether the Pension Fund applied the legislation correctly and whether the reduction can be challenged.

This was precisely the situation faced by Mr Chekryhin, a military pensioner who contacted our law firm for legal assistance. His pension had originally been calculated at 90% of his monetary allowance. However, following changes in the regulatory framework and a subsequent recalculation, the Pension Fund began calculating his pension at only 70% of the relevant monetary allowance.

Mr Chekryhin disagreed with the reduction, and we decided to challenge the Pension Fund’s actions before an administrative court.

The key issue was whether the new 70% limit could be applied to a pension that had previously been granted at 90%.

Mr Chekryhin’s pension had been granted in October 2005. Under the legislation applicable at that time, its basic amount was calculated as 90% of the relevant monetary allowance.

By the time the subsequent recalculation was carried out, the legislation provided for a maximum pension percentage of 70% of monetary allowance in the circumstances specified by law.

However, our position was that this new percentage limit governed the initial granting of new pensions and could not be used to reduce the percentage of a pension that had already been granted under the legislation previously in force.

The granting of a pension and the subsequent recalculation of an existing pension are legally distinct procedures. Therefore, legislative amendments concerning the percentage used when granting a pension should not automatically be applied retrospectively when recalculating a pension previously granted at a higher percentage.

Applying the 70% limit to Mr Chekryhin’s existing pension would effectively have reduced the basic percentage established when his pension entitlement was originally determined.

The court accepted our arguments and upheld the claim.

The Pension Fund of Ukraine was ordered to recalculate and pay Mr Chekryhin’s military pension using the original basic percentage of 90% of the relevant monetary allowance, taking into account the amounts already paid.

Importantly, the judgment also resulted in Mr Chekryhin becoming entitled to receive the outstanding difference between the pension calculated at 70% and the pension calculated at 90% for the relevant period of underpayment.

Our law firm was also able to secure prompt enforcement of the judgment, which is particularly important in pension disputes, where obtaining a favourable judgment is only one part of effectively protecting a pensioner’s rights.

This case illustrates an important principle in military pension disputes: a statutory percentage introduced for the granting of new pensions should not automatically be used to reduce the percentage of a pension that was previously granted under earlier legislation.

Therefore, if a military pension was originally granted at 80%, 85%, 90% or another percentage of monetary allowance and the Pension Fund subsequently reduced that percentage during a recalculation, it is important to examine the legislation applicable when the pension was originally granted and the legal basis for the subsequent recalculation.