The Government approved a bill amending the Social Security Code to regulate the phase of payment from the second pension pillar. The changes envisage the introduction of three types of pension products that will be paid by the Universal Pension Funds (UPF): lifelong pension for old age, deferred and one-time payment of funds under the individual account of each insured person.

It is planned to pay a lifelong pension for old age when the amount of funds in the individual account of the insured person allows for it to be granted in a monthly amount of not less than 15% of the minimum pension for length of service and age. Deferred payment of the funds under the individual accounts is envisaged when the funds under the account of an insured person are insufficient for granting of a lifelong pension for old age but exceed three times the amount of the minimum amount of the pension for length of service and age. A one-time payment of the funds under the individual account is offered in case the pension savings of the insured person in a universal pension fund are less than three times the amount of the minimum amount of the pension for length of service and age.

The bill regulates the basic rules for granting, paying, recalculating or updating pensions, as well as the rights of the heirs of the insured persons and pensioners under UPFs. It is explicitly provided that the guaranteed amount of the supplementary lifelong pension for old age and the deferred payment may not be less than that calculated based on the amount of the gross amount of insurance contributions transferred by the National Revenue Agency and the National Social Security Institute for the relevant insured person.

The purpose of the bill is to create a full and consistent regulation of the phase of payment from the second pension pillar, which would facilitate the informed choice of persons subject to additional mandatory pension insurance. In this regard, the bill proposes a change in the period in which individuals can exercise their right to choose type of insurance. Thus, the first groups of insured persons are guaranteed a longer period to get acquainted with the legal changes. It also creates an opportunity for them to make a more accurate assessment of the amount of their future pensions depending on the accumulated funds in their individual accounts within a period as close as possible to retirement.

It is envisaged that persons who reach the retirement age between 2022 and 2025, including, will be able to exercise the right to choose type of insurance up to 1 year before the said age. This period shall increase gradually until 2038, when the insurance will be able to change no later than 5 years before attaining the retirement age.