Proposals for reforming the pension system reviewed

President Shavkat Mirziyoyev reviewed a presentation on proposals to reform the pension system.

Over the past ten years, pensions in the country have increased 3.3-fold, and the minimum pension has been set above the level of minimum consumer spending. Until 2021, the pensions of 1.1 million citizens amounted to less than 400,000 UZS. Today, the minimum pension is 878,000 UZS, while the minimum consumer spending is 715,000 UZS.

It was noted that in countries with a developed funded pension system, pension funds serve as a long-term resource for the economy.

According to estimates, if the country's pension system is properly organized, long-term capital can be attracted to the economy. Experts from the International Monetary Fund, the World Bank, the Asian Development Bank and the International Labour Organization also confirm this.

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

At present, 0.1 percent of citizens’ salaries is transferred to their funded pension accounts. The annual return of 10 percent accrued on these funds is almost twice as low as the return on bank deposits.

In this regard, new mechanisms were proposed to increase the attractiveness of this system and encourage the active participation of the population in it.

In particular, it is envisaged that if a citizen with a monthly salary of up to 7.6 million UZS, equivalent to 15 basic pension calculation units, transfers 5 percent of their income to a funded pension account, the state will additionally contribute another 2.5 percent.

For citizens with a monthly salary exceeding 7.6 million UZS, it was proposed to transfer 1 percent of the social tax paid to their funded pension accounts.

Particular attention was paid to improving the procedure for calculating pension amounts.

At present, pensions are calculated based on wages for any five years of employment during the past ten years. In addition, the portion of wages exceeding 6 million UZS is excluded from the calculation. In some cases, this leads to a reduction in the average pension amount for citizens.

In this regard, it was proposed to increase the earnings period taken into account when calculating pensions from five to 20 years, and to exclude certain low-income periods from the calculation.

In addition, starting in 2027, it is planned to raise the upper wage threshold used to calculate pensions from the current 6 million UZS to 6.6 million UZS.

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 futures of millions of citizens and pointed to the need to carefully calculate the social and economic impact of each proposal.

The task was set to openly discuss these issues with the involvement of the public, the wider community, the media and bloggers, as well as to clearly explain to citizens the goals and expected outcomes of the reforms.

Responsible officials were instructed to thoroughly study international experience and submit a draft law on the creation of private and corporate pension systems.

UzA