Pension Recalculation: Salary Limits and Insurance Periods
PENSION RECALCULATION
The Supreme Court regularly considers disputes concerning pension provision and develops legal positions that guide the application of Ukrainian pension legislation. A significant number of such cases concern the recalculation of pensions and challenges to decisions or actions of the Pension Fund of Ukraine.
One such legal position was set out in a Supreme Court judgment of 24 November 2020. The dispute concerned the rules that had to be applied when recalculating a pension originally granted under legislation that was in force at the time of the initial pension calculation.
The claimant brought proceedings before the court seeking to require the Pension Fund to recalculate and pay his pension:
– without applying the limitation based on 5.6 average monthly salaries;
– by excluding a particular insurance period from the pension calculation and from the calculation of the individual salary coefficient, together with other related claims.
The courts of first instance and appeal dismissed the claim. They concluded that the pension had originally been granted at a time when the relevant calculation rules were governed by Law No. 400/97-VR. Accordingly, the Pension Fund had correctly applied the legislation that governed the pension calculation at the relevant time.
After examining the parties’ arguments and the case materials, the Administrative Cassation Court within the Supreme Court agreed with the lower courts.
The Supreme Court noted that the claimant’s pension had been granted when the pension calculation was governed by Article 41 of Law No. 400/97-VR. Consequently, the Pension Fund had correctly calculated the pension in accordance with the legislation applicable when the relevant pension rights were determined.
The Court also considered the claimant’s request to exclude a particular insurance period from both the pension calculation and the calculation of the salary coefficient.
The Court concluded that this claim had also been properly dismissed because the requested method of calculation was inconsistent with the provisions of Law No. 400/97-VR governing the relationship between the periods of employment taken into account and the earnings used to calculate the pension.
In other words, a pensioner cannot necessarily select individual elements of the pension calculation independently of the statutory calculation mechanism. The relevant employment periods, earnings and applicable coefficients must be determined in accordance with the legislation governing the particular pension calculation.
The claimant’s remaining demands were also dismissed because they were directly connected with the principal claims that the courts had found to be without sufficient legal grounds.
As a result, the Supreme Court upheld the judgments of the lower courts and refused to order the requested pension recalculation.
The practical significance of this decision is that the outcome of a pension recalculation dispute depends not only on the legislation currently in force but also on which statutory rules governed the original granting and calculation of the pension. Changes in pension legislation do not automatically mean that every pension previously granted must be recalculated using a new calculation method.
Therefore, before challenging the Pension Fund’s refusal to recalculate a pension, it is important to determine when the pension was originally granted, which legislation applied at that time, which earnings and insurance periods were used in the calculation and whether subsequent legislative changes actually provide legal grounds for recalculation.
