Major change in pensions: state may add 50 percent to savings

A number of important proposals aimed at reforming the pension system have been put forward in Uzbekistan. These include increasing the cap on the maximum pension amount, introducing a new voluntary savings system, and changing the procedure for calculating pensions.

Additionally, there are plans to launch the "Mening pensiyam" (My Pension) mobile application, which will allow citizens to track their work experience, social taxes, and accumulated funds via their phones.

Cap for high earners to be reviewed

According to Murod Otajonov, Director of the Pension Fund, currently only the portion of a monthly salary up to 6 million soums is taken into account when calculating a pension.

As a result, even for an employee earning 15 million soums per month, the maximum pension is approximately 3.3 million soums.

Under the new proposal, there are plans to increase the maximum salary threshold used for pension calculations. If the initiative is adopted, the pensions of citizens who earned higher wages and paid more social taxes could also increase.

However, the exact amount of the new cap has not yet been announced.

If an employee contributes 5 percent, the state will add another 50 percent

One of the most significant innovations is the proposal to introduce a voluntary funded pension system.

According to the plan, an employee could voluntarily direct 5 percent of their monthly salary to the pension fund. The state would then add another 50 percent to the amount contributed by the employee.

For example, if an employee with a salary of 7 million soums transfers 350,000 soums to the fund each month, the state is expected to add an additional 175,000 soums.

According to the provided calculations, while such an employee might save approximately 5 million soums over 20 years under the current system, this amount could reach 126 million soums through the new mechanism.

This figure is an initial estimate, and the final result will depend on the system's terms, the duration of payments, and other factors.

Pensions may now be calculated based on 20 years of income

Currently, the pension amount is calculated based on the salary of any 5 consecutive years within the last 10 years of an employee's work history.

The new proposal plans to determine the pension based on the salary earned over a 20-year work history.

This change could allow for a more comprehensive account of a citizen's long-term labor and income. At the same time, it will become clear who benefits more or less from the new formula once the exact calculation procedure is published.

"Mening pensiyam" app to be launched

Strengthening digital oversight in the pension system is also planned. To this end, a mobile application called "Mening pensiyam" is being developed.

Through the app, citizens will be able to monitor the following in real-time:

• work experience;

• official salary;

• paid social taxes;

• accumulated pension funds.

This service could allow citizens to identify errors in their records and correct them in a timely manner before retiring.

Proposals are not yet official policy

The announced changes are currently at the proposal and planning stage. Final decisions regarding when they will be implemented, what the new pension cap will be, and who will be eligible to use the voluntary savings mechanism have not yet been announced.

If these initiatives are adopted, it could mark one of the biggest changes in the Uzbek pension system in recent years.