Pension indexing in 2025: details revealed on how much payments will increase.

The Ministry of Social Policy has prepared a draft budget for the Pension Fund of Ukraine for 2025. Among other things, it discusses the establishment of the pension indexation coefficient. The draft budget of the Pension Fund of Ukraine has been published on the website of the Federation of Trade Unions of Ukraine.

What is Pension Indexation

Pension indexation is a mechanism for increasing the amount of pension payments from the state, allowing for a complete or partial compensation for the rising costs of consumer goods and services over the past year.

In other words, it reflects the increase in pensions by the inflation rate – the percentage by which essential food products, utilities, and so on have become more expensive.

In addition to inflation, indexation also depends on the average salary from which working individuals pay the single social contribution. Throughout 2024, the average salary has been increasing month by month.

How Much Will Pensions Increase in Ukraine

According to the draft budget of the Pension Fund of Ukraine, the pension indexation coefficient in 2025 will be 1.10.

“The total amount of expenditures in the draft budget of the Pension Fund of Ukraine for 2025 is set at 908.2 billion hryvnias. This includes the recalculation of pensions and monthly insurance payments using a coefficient of 1.10 in 2025,” states the explanatory note to the document.

This means pensions will increase by 10%. The recalculation will be done individually and automatically for each person, with a lower and upper limit set for indexation. For example, last year the indexation coefficient was 1.079, with a minimum increase of 100 UAH and a maximum of 1577 UAH. The year a person retires is also taken into account during the recalculation.

When Will Pension Indexation Occur

Pension indexation in Ukraine takes place annually in March. The draft budget of the Pension Fund of Ukraine states that the indexation will occur on March 1, 2025.

Additionally, the draft will be open for public discussion until January 10.