Thousands of protesters rallied outside Ukraine's parliament on Thursday before a final vote on a pension reform that would raise the retirement age for women and is key to unfreezing a $15-billion (U.S.) loan from the International Monetary Fund.
There are nine pensioners per 10 pension fund contributors in the former Soviet republic and the ratio is set to worsen in the future, making the system an unbearable burden for the state budget, analysts say.
The government of Ukrainian President Viktor Yanukovich pledged last year to implement the reform as part of its deal with the International Monetary Fund. The fund suspended payouts to Ukraine this year after the reform was delayed.
Ukraine's central bank said in May that a failure to regain access to IMF financing soon could trigger a downgrade of the country's credit rating at a time when the government needs to borrow on financial markets to refinance earlier debts.
Last month, the parliament approved the reform bill, which would gradually raise the retirement age for women to 60 from 55, in the first reading. It was due to start a final discussion on the bill on Thursday.
Hours before that, thousands of people marched through central Kiev and rallied outside parliament, holding banners that read "No to reforms at the expense of life."
Among the protesters were trade union activists and opposition supporters galvanized by the trial of former prime minister Yulia Tymoshenko, Mr. Yanukovich's fiercest political rival, who is charged with abuse of power.
"We will do our best to stop this pension genocide," said Andriy Pavlovsky, a lawmaker from Ms. Tymoshenko's BYuT party.
Though individual pensions are relatively low at about $140 a month on average, total pension expenditure amounted to 18 per cent of Ukraine's gross domestic product in 2009, one of the highest rates in Europe.
However, critics of the reform argue that raising the retirement age is inhumane in a country with relatively low life expectancy and the government should instead focus on securing economic growth and improving tax collection.
Members of parliament said discussion of the bill could last until late on Thursday or continue on Friday.