Ministry of Economy and Finance of the Republic of Uzbekistan

People may work for 25, 30 or even 40 years. During this time, they hold different positions, develop their professional skills, support their families, and contribute to the state budget and the Pension Fund.

Under the current pension calculation system, the highest consecutive five years of earnings within an individual’s most recent ten years of employment are taken into account. In certain circumstances, this approach may be beneficial to an individual. For example, if a person has advanced professionally and experienced an increase in salary during the final years of their career, this may result in a higher pension.

However, there is another side to the issue, which gives rise to two important considerations.

The first concerns social equity. Each person’s career path is different. Some individuals may work steadily for 30 years but experience illness, move to less demanding employment, or face a reduction in earnings in the years immediately preceding retirement. Others may be unable to work full-time in their final years due to enterprise restructuring, family circumstances, caring responsibilities for a child with a disability, or supporting elderly parents. In such cases, calculating a pension solely on the basis of the final five years of earnings may not fully reflect an individual’s contribution over many years of employment.

The second consideration is the potential for artificial manipulation of the system. An individual may have reported a relatively low salary or not fully declared their official income for many years, while artificially increasing their reported earnings during the five years preceding retirement. As a result, despite having paid relatively low social taxes over the course of their employment, their pension may be calculated on the basis of a significantly higher level of earnings.

Both situations lead to an important question: shouldn’t the contribution of those who have worked officially for more years and made greater contributions be reflected more fully in their pension?

International Experience

International practice offers a range of approaches.

In Belarus, Latvia, Lithuania, Kyrgyzstan, Turkmenistan, Ukraine and Estonia, pension calculations are based on earnings for all periods following the introduction of individual pension contributions.

In Austria, Belgium, Czechia, Finland, Switzerland, Türkiye, Hungary, Luxembourg and Greece, pensions are calculated based on earnings throughout the entire working life. In France, the calculation is based on the best 25 years of earnings; in Slovenia, the best 35 years; and in Portugal, the best 40 years.

Therefore, the solution is not simply to “eliminate the five-year period” or to “calculate the pension based on the entire period.” Rather, the objective should be to strengthen social equity: a reduction in earnings during the final years of employment due to objective circumstances should not undermine the value of a person’s lifelong contribution. At the same time, a pension should be determined not by artificially increased earnings, but on the basis of social taxes actually paid over the years and officially documented employment.

A pension should be a fair outcome of an individual’s entire working life, rather than simply a reflection of earnings during a five-year period.

PR and Communications Department
Ministry of Economy and Finance