UKRAINE - Special pensions for judges and top-level officials should be abolished and replaced with a single pension based on salary and length of service, according to Ukraine’s president, Victor Yushchenko.

In his annual address to the parliament, Verkhovna Rada, Yushchenko claimed in the current financial crisis the country needs to restore financial stability and warned the 2009 State Budget needed to be “urgently and dramatically” revised.

He also claimed “it is necessary to urgently make realistic changes to the pension fund’s budget”, as it has a deficit reaching into billions even though it is already covered by money from the Stabilisation Fund.

He warned “such a policy will result in collapse”, and has instead called for the Stabilisation Fund to be returned to its original purpose of financing major state projects rather than “repaying arrears of wages”, which he described as “absolute nonsense”.

Yushchenko told the parliament “we need pension reform”, and claimed the fact that the former state prosecutor receives a monthly pension of UHA 50,000 (€4,689) while still working, and “deputies, judges or top-level officials” receive UHA 15-20,000 a month pension, is essentially “social injustice”.

He has demanded the “cancellation of all special pensions” by the Verkhovna Rada and the coalition government, and argued they be replaced by the introduction of a single pension for everyone based on salary and length of service.

In addition, Yushchenko proposed a new tax be introduced on real estate for “wealthy citizens”, which he claimed would strengthen the financial basis of local governments and help expand the state pension fund’s resources.

Meanwhile, Yulia Tymoshenko, the prime minister, revealed the government had doubled the grants from the State Budget to the State Pension Fund as part of its ‘anti-crisis programme’, a move which she said was designed to boost pensioner confidence.

Tymoshenko, who in March claimed she would not raise the state pension age, said revenues to the pension fund are enough to cover the monthly pension payments until the end of the year, and latest figures to 6 April 2009 show the fund had received UHA 3.8bn from the state.

That said, the changes proposed by Yushchenko follow the continued lack of progress on the pension reform first proposed in 2003 to introduce funded pension schemes through a second pillar.

Although legislation to introduce a second pillar law had its first reading in April 2007, changes in administration meant the process has been halted. (See earlier IPE article: Ukraine - another kind of volatility)

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