Daily Insight-Pension law passed; inflation and state budget in August; bond auction results

On its first work day after the summer vacation, 6 September, Ukraine\'s parliament adopted the necessary amendments to the Law on Pension Reform, with 248 votes, while the minimum necessary amount was 226. Without these amendments, the president could not have signed the law, because it happened to contain a proposal, authored by the opposition parliament deputy, Arseniy Yatsenyuk, that would effectively raise the size of the monthly pension benefit by UAH334 for 10m of the country\'s retirees, which, if summed up, would increase monthly expenditures of the State Pension Fund by UAH3.34bn. This would be a completely unmanageable burden for the Pension Fund, which does not even cover its current expenditures with its own revenues, so that the deficit is planned at UAH17.76bn in 2011, with revenue at UAH193bn and expenses at UAH209bn. The law is to take effect on 1 October, 2011, after being signed by the president.

The new pension law brings forward two main changes: first, it raises the number of years a citizen has to work before becoming eligible for a state pension; and second, it puts a ceiling on the maximum pension benefit. For example, the pension age for women was raised to 60 from 55 years, and the ceiling was instituted for the maximum size of any state pension; it cannot exceed 10x the minimum subsistence levels, which makes the maximum possible size of a pension UAH7,640 (US$955) a month at present.