Uzbekistan's pension system will be prepared for reform until the end of 2027

Uzbekistan's pension system will start preparing for reform before the end of 2027

The preparation of the regulatory framework for transforming Uzbekistan's funded pension system will proceed in stages and will be completed no earlier than the end of 2027. The authorities plan to review approaches to managing pension savings, introduce new mechanisms for their formation, and create conditions for the development of private and corporate pension funds.

According to the plan, by January 1, 2027, the Ministry of Economy and Finance must prepare a draft regulatory act that will define the organizational structure and principles of managing the funded pension system, the procedure for accounting for citizens' funds, as well as the creation of a Supervisory Board.

The next stage is scheduled until June 1, 2027. Taking into account advanced international experience, the ministry is to develop a draft presidential decree on the phased implementation of a new pension model. It will be built on the conditional and individual accounting of citizens' contributions to the Pension Fund, additional state support, and independent accumulation of funds for future pensions.

The third stage is scheduled for the end of 2027. By this time, the Cabinet of Ministers should receive a draft law on the creation and activities of private and corporate pension funds. The document will be prepared jointly with the Central Bank, the National Agency for Perspective Projects, the Ministry of Employment and Poverty Reduction, the Federation of Trade Unions of Uzbekistan, and the Confederation of Employers of Uzbekistan.

It is expected that the development of such funds will create a competitive environment in the financial market and give citizens the opportunity to independently choose methods for forming pension savings.

It was previously reported that international consultants would participate in reforming Uzbekistan's pension system.

One of the key proposals is to transfer the funded pension system from Xalq Bank to the Pension Fund under the Ministry of Economy and Finance. Under the off-budget Pension Fund, it is planned to establish a project office that will deal with the development of the funded system and the creation of mechanisms for its financial sustainability.

For this purpose, an additional 31 staff positions are provided, funded from the State Budget.

It is also proposed to incentivize voluntary pension savings. Starting from 2027, provided that a citizen directs 5% of their salary to a savings account, state support could amount to up to 50% of the contribution amount.

Another measure applies to high-income workers. It is proposed to direct a portion of the social tax levied on salaries exceeding 15 times the basic calculating amount to individual funded pension accounts: 1% from 2027, 2% from 2033, and 3% from 2040.

It is proposed to recognize accumulated funds and investment income from them as the personal property of citizens with the right of inheritance. Starting in 2030, it is also planned to allow their use for the treatment of severe illnesses and for down payments on mortgages.

Changes will also affect work experience requirements. The minimum work experience required to qualify for a pension is expected to increase from seven to 15 years. The increase will be gradual: starting in 2027, the requirement will be increased annually to bring it to 15 years by 2034.

An old-age allowance is provided for citizens who lack sufficient work experience for a pension. However, it is proposed to pay it only five years after reaching the established retirement age.

In addition, the procedure for calculating pensions will change. Starting in 2027, the earnings period taken into account when assigning a pension is planned to be increased annually by one year — from five to 20 years. At the same time, it is proposed to exclude the 10% period with the lowest income from the calculation.

Incentives are also provided for those who decide to delay retirement. Starting in April 2028, the maximum salary taken into account when calculating a pension is proposed to be increased from 12 times to 13 times the basic calculating amount. If retirement is deferred by six months, this limit will rise to 14 times, and by a year — to 15 times.

For now, all listed measures remain proposals in the draft presidential decree. Their implementation will depend on the final adoption of the relevant regulatory acts.