Who will the pension reform affect? – Interview with officials
An increase in the retirement age is being proposed in Uzbekistan – but this will not affect those who are currently receiving a pension. According to the published draft of the pension reform, it is intended to award fair pensions to those who have worked long and productively. The government aims to increase the number of people employed in the labor market for a long period by extending the minimum required work experience from 7 to 15 years.
Who will the pension reform affect? – Interview with officials
Changes to the pension system are being proposed in Uzbekistan. The draft document on this matter has been released for public discussion. According to the draft, it is proposed to gradually extend the wage period taken into account when calculating pensions from the current five years to 20 years, and to set higher pensions for those who retire later. In addition, it is planned to gradually increase the retirement age. Also, the self-employed will mandatorily pay social tax and, in return, will have the opportunity to receive maternity and sick leave benefits. Another novelty is that if everyone transfers 5 percent of their salary to their accumulative pension, this will serve as a base for them before retirement in the future. Kun.uz discussed these issues with Pension Fund officials Sardor Fayzullayev and Abror Kholmatov.
"The increase in the number of pensioners will be a financial burden on the next generation"
We are monitoring and analyzing public opinion. Many people are coming to the conclusion that the sole purpose of the reform is to increase the retirement age, but in reality, the goal is to provide citizens with a decent pension in old age, to grant pensions commensurate with their long years of work, to adjust the pension amount to the social tax they paid, and to encourage citizens' participation in the accumulative pension system. At the same time, there are also proposals aimed at increasing the coverage of citizens working in the informal sector in the pension system by transitioning them to the formal sector.
In the pension system, starting from 2028, it is envisaged to increase the retirement age by three months every year. The main reason for this is related to the increase in life expectancy. There are 3 concepts here: pension, life expectancy, and the pension receipt period. These are not the same concepts, but they complement each other. Life expectancy today has changed compared to 1990 (specifically when the Law on Pensions was adopted), when the retirement age was set at 60-55 years. Since then, life expectancy has changed. In a system based on "solidarity of generations," this causes a financial burden to be passed on to future generations. That is, for comparison, if in the 90s the pension receipt period was five years for men and 15 years for women, today it is 22 years for women and 13 years for men. That is, the pension receipt period has increased on its own. We can explain this by the increase in life expectancy.
In addition, the share of pensioners in the population is also growing. While today the share of pensioners in the population is 11 percent, by 2040 this figure is expected to reach 15 percent. This, in turn, affects the financial sustainability of the system.