Government proposes changes to pension calculations and funded pension savings

According to the presidential press service, pension payments in Uzbekistan have increased 3.3-fold over the past decade, while the minimum pension has been set above the minimum consumer expenditure level. Before 2021, around 1.1 million pensioners received less than UZS 400,000 per month. Today, the minimum pension stands at UZS 878,000, compared with the minimum consumer expenditure level of UZS 715,000.

The presentation noted that in many developed countries, funded pension systems serve as an important source of long-term investment for the economy. Estimates suggest that a properly functioning pension system in Uzbekistan could also help mobilize long-term financial resources. This assessment is supported by experts from the International Monetary Fund, the World Bank, the Asian Development Bank, and the International Labour Organization.

Against this backdrop, officials proposed reforming the pension system in line with international best practices while expanding funded, private, and corporate pension schemes.

Incentives for voluntary pension savings

Currently, employees contribute 0.1% of their salaries to funded pension accounts. However, the annual 10% return credited to these accounts is nearly half the rate typically offered on bank deposits.

To encourage greater participation, the government has proposed new incentive mechanisms.

Under the proposal, employees earning up to UZS 7.6 million per month – equivalent to 15 times the pension calculation base – would be able to voluntarily contribute 5% of their salaries to funded pension accounts. The state would add a further 2.5% contribution.

For those earning more than UZS 7.6 million per month, it is proposed that 1% of the social tax paid on the portion of income above that threshold be transferred to their funded pension accounts.

Pension calculation method to be revised

The proposals also call for changes to the way pensions are calculated.

At present, pensions are based on salaries earned during any five years of a person's last 10 years of employment. In addition, only monthly earnings of up to UZS 6 million are taken into account, which in some cases reduces the final pension amount.

To address this, officials proposed extending the salary assessment period from five years to 20 years while excluding certain periods of unusually low earnings from the calculation.

Beginning in 2027, the upper salary ceiling used for pension calculations is also proposed to increase from UZS 6 million to UZS 6.6 million.

According to official estimates, the revised methodology could increase pension payments for newly retired citizens by around 8% compared with the current system.

President calls for broad public discussion

Mirziyoyev stressed that changes to the pension system would affect the lives and future of millions of citizens, underscoring the need to carefully assess the social and economic impact of every proposal.

He instructed officials to hold an open public discussion involving citizens, the wider public, the media, and bloggers, while clearly explaining the objectives and expected outcomes of the reform.

The president also tasked the responsible agencies with conducting a comprehensive review of international experience and preparing draft legislation on the establishment of private and corporate pension systems.