KYIV, Ukraine, June 9, 2011 /PRNewswire/ --

International Monetary Fund and World Bank approved the draft law on pension reform in Ukraine, according to the Vice Minister - Minister of Social Policy of Ukraine Serhiy Tihipko. The amended draft introduces a three-tier system in Ukraine, which is common in most EU countries; also the draft gradually raises retirement age for women from 55 to 60.

Since the draft was forwarded to the parliament six months ago, its provisions on raising the retirement age for women, cutting down on maximum pension size, etc., gave life to vital discussions in the Ukrainian society. Trade unions went on strike protesting against the law-to-be. The government, however, insisted on aforementioned provisions as inevitable. In the light of such developments, the future law was redrafted and returned to the parliament. It is expected that the amended draft will be voted for by the Ukrainian law makers by August.

The most recent 11 amendments include cutting down the maximum pension size, simplification of pension adjustments, introduction of a one-time cash-out payment to doctors, teachers, and social workers upon retiring, etc. The recent amendments to the draft were agreed upon with unions and employers, according to Tihipko.

If adopted by the Ukrainian parliament, the draft will allow to resume cooperation with the IMF and to streamline the receiving of further disbursements under the stand-by agreement from the Fund.

The Ukrainian leadership launched pension reform to combat the growing Pension Fund deficit, which, among other things, was caused by aging of the population. The concept of pension reform is based on a three-tier system, which includes the existing mandatory non-funded state or PAYGO pillar, a mandatory state-funded pillar, and a voluntary private pension plan. The system enables an individual to accumulate any size of pension that they would like (and can afford) to receive at retirement. The draft law also foresees gradual increase of the retirement age for women: the process will take 10 years by raising the retirement age by 6 months each year.

SOURCE Worldwide News Ukraine