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08.12.2010 | Maxim Shcherbatyuk

Restricting maximum pension size: reform or more PR?

   

Following the meeting between Prime Minister Azarov and the Head of the Pension Fund, B. Zaichuk, the media reported that the maximum size of pensions was to be restricted.

It is clear that the government wishes to reduce expenditure on payment of pensions since the Pension Fund has major difficulty in forming its budget. Nor does it seem fair to have a huge divide in pensions between ordinary people and “selected” pensioners. The divide is massive with reports in the media suggesting that pensions can be 800 UAH a month (less than 100 Euro) or 50 thousand.

However in resolving this issue the government has over many years already encountered the problem of a lack of divide in legislation between guarantees which by their very essence are socio-economic rights with provisions which are effectively privileges. If with regard to the first, no reduction in their content and scope is permitted, privileges can be restricted.

The existence of this problem effectively renders it impossible for the government to carry out State regulation in this sphere. This has been highlighted on a number of occasions in Constitutional Court Judgments where the Court has examined issues linked with exercise of the right to protection against restrictions of the constitutional right to a decent standard of living.

The Constitutional Court has several times found unconstitutional amendments to laws which envisage restriction of the maximum amount of pensions for certain categories of the public.

For example, the Constitutional Court found unconstitutional the restriction to the maximum size of pensions in the Law on the State Budget for 2008 and on amendments to some legislative acts of Ukraine, as well as the relevant provisions of the Cabinet of Ministers Resolution on Some Issues of Social Protection of Certain Categories of Citizens from 28 May 2008, No. 530.

In the Constitutional Court Judgments it was stated that benefits, compensation, guarantees are a form of social assistance and necessary component of the constitutional right to a sufficient standard of living. Therefore, reduction in the content and scope of this right by adopting new laws or making amendments to current laws are not permitted by Article 22 of the Constitution.

It therefore seems rather doubtful that these government plans can be implemented without radical reform of the system of benefits and the entire system of pensions. Without such measures words about achieving social justice in the size of pensions will remain words, a certain PR move for the government in office.

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