It has been proposed to extend the salary period used for calculating pensions from 5 years to 20 years. What does this mean?
According to the pension reform draft, it is proposed to gradually expand the wage period taken into account when calculating pensions. In an interview with Kun.uz, Pension Fund specialists emphasized that this change will allow citizens to include periods of their career with higher earnings into the pension calculation.
It has been proposed to extend the salary period taken into account when calculating pensions from 5 years to 20 years. What does this mean?
"The period with the highest monthly salary will also be covered"
According to current legislation, two main criteria are taken into account when assigning a pension to a citizen: length of service and average monthly salary. The base amount of the pension is set at 55 percent of the average monthly salary.
Under the current procedure, the best continuous five years of a retiring citizen's last 10 years of employment are taken to calculate the average salary.
The main goal of the proposed procedure is to include the high-income periods of a citizen's career in the pension calculation.
According to analysis, citizens' income is usually higher between the ages of 35 and 50. Under the current procedure, because the best five years of the last 10 years are taken into account, a citizen's period between the ages of 50 and 60 may fall into this calculation. During this period, the salary is highly likely to be lower compared to previous years.
Therefore, in the proposed system, the period taken into account will be gradually expanded up to 20 years. As a result, the periods when the citizen received a higher salary will also be included in the pension calculation.
This change does not mean taking 20 years into account all at once. The period will be extended by one year every year. For example, instead of the current five years, it will be six years in the next stage, then seven years, and so on, increasing up to 20 years.
"The transition to 20 years will be gradual"
This process will be implemented gradually. That is, 20 years of salary will not be taken into account as early as next year. The period taken into account will extend by one year annually.
As a result, by around 2041, the capability to take into account 20 years of salary data will be established.
Another reason for this is that today, pensions, including old-age and disability pensions, are assigned proactively. Citizens do not need to make a separate application to the Pension Fund. When a pension is assigned, a notification about this is sent to their mobile application.