Unpaid Pensions and Pension Arrears for Internally Displaced Persons in Ukraine
It is no secret that Ukraine’s social policy has faced significant challenges in recent years. One of the most pressing issues has been the payment of pensions. The crisis in the pension system became particularly acute after the outbreak of hostilities in eastern Ukraine. State authorities were forced to relocate to territories controlled by the Ukrainian government. As a result, Ukrainian pensioners residing in certain areas of Donetsk and Luhansk regions encountered serious difficulties in receiving their pensions and often had to leave these territories in order to restore their payments.
In 2014, legislation was adopted introducing the issuance of certificates confirming the status of an internally displaced person (IDP) to citizens who were forced to relocate to government-controlled territory and whose registered place of residence was in Donetsk or Luhansk region. This became a crucial issue for pensioners because obtaining an IDP certificate directly affected the payment of pensions. In practice, failure to obtain such a certificate could result in the suspension of pension payments until the necessary requirements were fulfilled.
In addition, the state introduced large-scale verification procedures concerning persons whose registered place of residence was located in territories not controlled by the Ukrainian government. If such verification established that a person had not crossed the contact line for a prolonged period or had not contacted the Pension Fund of Ukraine, pension payments could be suspended. As a result, many Ukrainian citizens who, for objective reasons, were unable to travel to government-controlled territory were deprived of their pension payments.
When the intensity of hostilities in eastern Ukraine temporarily decreased, many pensioners began travelling to government-controlled territory in order to restore their pension payments.
Pension payments were eventually resumed in many cases. However, amounts accrued for previous periods remained effectively “frozen”. This was primarily connected with legislative provisions according to which pension amounts that had not been paid before the month in which payments were resumed were to be recorded by the competent pension authority and paid under a separate procedure established by the Cabinet of Ministers of Ukraine. For a considerable period of time, the absence of an effective mechanism for such payments resulted in substantial pension arrears.
This situation forced a large number of Ukrainian pensioners to apply to the courts to protect their rights. Ukrainian courts frequently ruled in favour of pensioners and ordered the territorial bodies of the Pension Fund of Ukraine to calculate and pay pension arrears.
However, even after obtaining favourable court judgments, pensioners often encountered difficulties with their enforcement due to insufficient budget funding and the absence of an effective procedure for paying the respective amounts. As of the first half of 2021, significant debts relating to court judgments concerning pension payments remained outstanding. This situation also resulted in applications being lodged with the European Court of Human Rights concerning prolonged non-enforcement of domestic court judgments.
Such circumstances inevitably affected not only the financial and social position of pensioners but also raised broader questions concerning Ukraine’s compliance with its obligations in the field of human rights and the enforcement of final court judgments.
On 12 November 2021, Resolution of the Cabinet of Ministers of Ukraine No. 1165 entered into force. It was intended to regulate the gradual payment of pension amounts that had remained unpaid for periods preceding the month in which pension payments were resumed. The main provisions of this mechanism should therefore be considered in more detail.
First, the territorial bodies of the Pension Fund of Ukraine were required to maintain a list of persons entitled to receive pension payments for previous periods. This list serves as the basis for subsequent payment of pension arrears and includes persons whose pensions had not been paid before their payments were resumed.
Second, the procedure provided for monthly payment of pension arrears in an amount corresponding to the subsistence minimum established for persons who have lost their capacity to work as of 1 January of the relevant calendar year. At the time the procedure was introduced, the applicable amount was determined according to the legislation then in force. The amount of an individual payment could also depend on the relevant information contained in the list of recipients.
Third, the procedure regulated situations where the available budget funding was insufficient to cover all outstanding pension payments. In such circumstances, payments could be made proportionally to the budget allocations provided for the payment of pension arrears for previous periods.
Thus, the introduction of this procedure demonstrated an attempt by the state to address the accumulated problem of unpaid pensions and pension arrears owed to internally displaced persons in Ukraine. At the same time, the practical effectiveness of such mechanisms depends on their actual implementation, the availability of budget funding and compliance by the Pension Fund of Ukraine with both legislation and final court judgments.
