Pension Rights Between Ukraine and Kuwait
Moving to another country for work or permanent residence has become increasingly common. Ukrainians may relocate for employment, better living conditions, family circumstances or other personal reasons. Some decide to settle abroad permanently and move together with their families. This raises important questions about pension rights and pension payments when a Ukrainian citizen works or resides in Kuwait.
Recognition of employment and insurance periods accumulated in Kuwait for Ukrainian pension purposes depends on the international social security framework applicable between the two countries. In the absence of an agreement providing for the aggregation or mutual recognition of insurance periods, employment in Kuwait is not automatically included in the insurance record required for a Ukrainian pension. Likewise, Ukrainian insurance periods are not automatically recognised for Kuwaiti pension purposes solely on the basis of Ukrainian legislation.
If a person has already been granted a Ukrainian pension and subsequently moves to Kuwait, a separate question arises as to whether residence abroad affects the right to continue receiving that pension and how the pension income will be taxed.
Ukraine and the State of Kuwait have concluded an international agreement for the avoidance of double taxation. The relevant provisions determine which state has the right to tax pensions and other similar remuneration, depending on the nature and source of the payment, the pensioner’s tax residence and other circumstances specified by the applicable international rules.
Separate provisions apply to remuneration and pensions connected with government service. Depending on the circumstances, such payments may be taxable in the state in connection with whose government service they are made or in the other contracting state, taking into account factors including the recipient’s residence and nationality.
The payment of an already granted Ukrainian pension to a person residing abroad is a separate legal issue. In its Decision No. 25-rp/2009 of 7 October 2009, the Constitutional Court of Ukraine considered provisions that made pension payments to persons permanently residing abroad dependent on the existence of an international pension agreement between Ukraine and the relevant country.
The Constitutional Court declared such restrictions unconstitutional. Accordingly, the exercise of an acquired pension right cannot be made conditional solely on whether Ukraine has concluded a pension agreement with the pensioner’s country of residence. Permanent residence in Kuwait should therefore not, by itself, deprive a person of the right to receive an already granted Ukrainian pension.
It is important to distinguish between the recognition of Kuwaiti employment and insurance periods when determining entitlement to a Ukrainian pension, the taxation of pension income and the right to receive an already granted Ukrainian pension while residing in Kuwait. These are separate legal matters and may be governed by different provisions of national and international law.
Ukrainians who have worked in Kuwait should therefore retain documents confirming their employment, earnings and participation in the applicable Kuwaiti social insurance or pension system. When applying for a pension or arranging pension payments abroad, the legislation and international arrangements applicable at that time should be examined to determine how the relevant foreign insurance periods affect the person’s pension rights.
