President reviews proposals for pension system reform

Over the past ten years, pension payments in the country have increased 3.3-fold, while the minimum pension has been raised above the minimum consumer expenditure threshold. Until 2021, the pensions of 1.1 million citizens were below 400,000 soums. Today, the minimum pension stands at 878,000 soums, while the minimum consumer expenditure level is 715,000 soums.

It was noted during the presentation that in countries with well-developed funded pension systems, pension funds serve as an important source of long-term investment for the economy.

According to estimates, with a properly structured pension system, long-term financial resources can be mobilized for the economy. This assessment is also supported by experts from the International Monetary Fund, the World Bank, the Asian Development Bank, and the International Labour Organization.

In this regard, the need to reform the pension system based on advanced international experience and to develop funded, private, and corporate pension systems was emphasized.

Currently, 0.1 percent of citizens' salaries is transferred to their funded pension accounts. The annual return on these funds is 10 percent, which is nearly half the average return on bank deposits.

In this context, new mechanisms were proposed to enhance the attractiveness of the system and encourage broader public participation.

In particular, it is envisaged that if a citizen earning up to 7.6 million soums per month (15 times the basic pension calculation unit) contributes 5 percent of their salary to a funded pension account, the state will make an additional contribution equivalent to a further 2.5 percent.

For citizens earning more than 7.6 million soums per month, it is proposed that 1 percent of the social tax paid on their behalf be credited to their funded pension accounts.

Particular attention was given to improving the procedure for calculating pensions.

Currently, pensions are calculated on the basis of earnings received during any five years within the last ten years of employment. In addition, the portion of monthly earnings exceeding 6 million soums is not taken into account in the calculation. In certain cases, this results in lower pension payments.

In this regard, it is proposed to extend the earnings period taken into account for pension calculations from five to twenty years, while also excluding certain periods of low income from the calculation.

Furthermore, starting from 2027, it is envisaged to increase the maximum salary taken into account for pension calculations from the current 6 million to 6.6 million soums.

According to estimates, this new procedure could increase pensions for newly retired citizens by 8 percent.

The Head of State emphasized that changes to the pension system affect the lives and future of millions of citizens and stressed the need to carefully assess the social and economic impact of each proposal.

He instructed that these issues be discussed openly with the participation of the population, the wider public, the media, and bloggers, and that the objectives and expected outcomes of the reforms be clearly explained to citizens.

The responsible officials were instructed to conduct a comprehensive study of international experience and submit a draft law on the establishment of private and corporate pension systems.