Pensions may increase by 7 percent: the salary calculation period will be extended to 20 years

In Uzbekistan, important changes directly serving the interests of the population are expected to be introduced into the pension system and the procedure for assigning pensions to citizens. Nuriddin Shodikhodjayev, Deputy Director of the Extra-budgetary Pension Fund, announced at a press conference held for media representatives that an official proposal has been developed to extend the salary period taken into account when calculating pensions from the current 10 years to 20 years. According to current rules, the determination of the pension amount is based on the best consecutive 5-year income from the last 10 years of a citizen's labor activity.

However, a thorough analysis of citizens' labor histories by the fund revealed that people's incomes in the last 10 years leading up to retirement drop by an average of 12 percent, as a result of which the current system artificially reduces the pension amount by 6-7 percent. If the new proposal is implemented, citizens' pensions will increase by at least 6-7 percent, and in addition, 2 non-consecutive years in which a citizen received lower wages or had a reduced income due to various reasons will be excluded from the calculation.

"20-year base, 7 percent growth, and 2 years excluded": 5 main points of the Pension Fund's proposal

The most important initiatives put forward at the press conference:

• The salary period will be expanded to 20 years: It is planned to extend the salary period considered in pension assignment from 10 to 20 years;

• Pension amounts will increase by 6-7%: The new algorithm will significantly increase citizens' pension payments;

• The 12% loss in the last 10 years will be eliminated: A solution is found to the problem where pensions decrease due to reduced income at the end of citizens' careers;

• Unfavorable 2 years will be excluded from the calculation: Any 2 non-consecutive years with low wages will be excluded from the calculation base;

• A fair approach to real labor experience: It is ensured that high salaries during a person's most productive periods are taken into account.

Pension calculation system: Comparison of current order and the new proposal

Comparison of differences in pension assignment rules and expected results:

Social and economic expertise: Why is a 20-year period fairer for citizens?

Conclusions of pension provision specialists and economists:

• "Mismatch between age and salary": Many citizens, on the eve of retirement (at ages 50–60), are forced to switch to lighter but lower-paying jobs due to health or heavy physical burden; the current 10-year limit forcedly included these low-wage years into the pension base, reducing the final payment;

• Inclusion of peak earnings at ages 35–45: Expanding the period to 20 years paves the way for including the periods when a citizen was at the peak of their career and received the highest salaries and bonuses into the base;

• Privilege of "excluding 2 years": The complete exclusion of 2 years with low wages due to illness, family circumstances, or temporary unemployment maximizes a person's overall average monthly salary.

In your opinion, will increasing the pension calculation period from 10 to 20 years and excluding 2 low-income years sufficiently improve the financial provision of our compatriots of retirement age? How do you personally assess this new proposal? Leave your comments in the comments section and share this analysis so that all labor veterans and future pensioners are informed!