Mirziyoyev Orders Preparation of Comprehensive Pension System Reform

Tashkent, Uzbekistan (UzDaily.uz) — President of Uzbekistan Shavkat Mirziyoyev has reviewed a presentation outlining proposals for a major reform of the national pension system. The key areas of focus include developing cumulative, private, and corporate pension systems, improving the methodology for calculating pensions, and creating additional incentives to encourage citizens to participate in the cumulative savings system.

During the presentation, it was noted that over the past decade, average pension payments in the country have increased 3.3 times. The current minimum pension stands at 878,000 soums, exceeding the officially established minimum consumer expenditure level of 715,000 soums. Prior to 2021, the pensions of approximately 1.1 million citizens fell below 400,000 soums.

The review highlighted that in countries with well-developed cumulative pension systems, pension funds serve as a vital source of long-term investment for the national economy. Experts estimate that a similar investment potential exists in Uzbekistan. This strategic transition is supported by international financial institutions, including the International Monetary Fund (IMF), the World Bank, the Asian Development Bank (ADB), and the International Labour Organization (ILO).

Currently, only 0.1% of an employee's salary is transferred to individual cumulative pension accounts in Uzbekistan, and the annual yield on these funds is capped at 10%—nearly twice as low as standard commercial bank deposit rates. To address this, officials proposed new mechanisms to make the cumulative system more financially attractive to the workforce:

For monthly salaries up to 7.6 million soums: Workers who voluntarily contribute 5% of their income to their cumulative pension accounts will receive an additional state-matched contribution equivalent to 2.5% of their earnings.

For monthly salaries above 7.6 million soums: The government proposes directing 1% of the social tax paid by their employers directly into the employees' cumulative pension accounts.

Another major portion of the proposed reform aims to improve how baseline pensions are calculated. Currently, a person's pension is determined using their salary from any five consecutive years within the last ten years of employment, with earnings exceeding 6 million soums excluded from the calculation. According to experts, this limit often lowers the final pension payouts.

The new proposal seeks to extend the historical salary period used for calculations from five to twenty years, while allowing individual periods of low income to be excluded from the average. Additionally, starting in 2027, the maximum salary considered for pension calculations will be increased from 6 million to 6.6 million soums. This adjustment is projected to raise pension amounts for newly retiring citizens by approximately 8%.

President Mirziyoyev emphasized that these changes affect the vital interests of millions of citizens and require a thorough assessment of their social and economic impacts. He ordered the organization of broad public discussions involving citizens, independent experts, media outlets, and bloggers to ensure the goals and expected outcomes of the reform are clearly understood across society.

Following the presentation, responsible state agencies were instructed to study global best practices and draft a law establishing private and corporate pension systems in Uzbekistan.