Ukraine’s pension system is on its last legs. Who will pay for your retirement?

Ukraine’s pension system is increasingly failing to provide an adequate income in old age. In 2025, the Pension Fund paid UAH 870.3 billion to 10.2 million pensioners, while social security contributions generated nearly UAH 600 billion. The remaining obligations were financed from the state budget, reducing resources available for education, healthcare and development.

The crisis is primarily demographic. Fertility has fallen to roughly one child per woman, while 73,000 births and about 260,000 deaths were recorded in the first half of 2026. A further 5.68 million Ukrainian refugees remain abroad. By 2050, the working-age share of the population may decline from 67% to 60%, while the proportion aged 65+ could rise from 17% to 25.5%.

Ukraine’s pay-as-you-go pension replaces only 20–25% of previous earnings, compared with an OECD average of 63%. International experience shows that sustainable systems combine a basic state guarantee with occupational or mandatory funded pensions and voluntary savings. These funds are invested over decades, generating income for future pensioners and long-term capital for the economy.

The report proposes gradually introducing personal pension accounts for workers under 40 and state co-financing for those aged 40–50. The transition deficit could be covered by a dedicated fund financed through privatisation proceeds and better management of state assets.

Other measures include gradually raising the retirement age to 65 and the contribution record to 39–40 years, while protecting those close to retirement; lowering labour taxes; encouraging voluntary savings; and replacing universal indexation with targeted support for the lowest pensions.

A funded system cannot work without a reliable capital market, an independent regulator, the rule of law and protection from political interference. Individuals must be able to see their account balance, contributions, fees and investments, while accumulated funds should be inheritable.

The pay-as-you-go pillar should remain the basic guarantee, but not the sole source of retirement income. A multi-pillar model could provide more adequate pensions while creating domestic investment capital for Ukraine’s recovery.

This analytical report was prepared by the Center for Social and Economic Research (CASE Ukraine) with support from the Askold and Dir Foundation, administered by ISAR Ednannia, as part of the project “A Strong Civil Society in Ukraine: A Driver of Reform and Democracy,” funded by Norway and Sweden. The content of the report is the sole responsibility of CASE Ukraine and does not reflect the views of the governments of Norway, Sweden, or ISAR Ednannia.