Uzbekistan among the five worst countries for pensions
Uzbekistan among the five worst countries for pensions and the worst in terms of age discrimination
06.07.2024
Article published on the yep.uz website
Uzbekistan ranks fifth from the bottom in terms of sustainability and adequacy of pension systems, according to the Allianz Pension Index report. In fact, in some respects, the country is the worst.
The Global Pension Report, based on data as of March last year, has ranked 75 countries. The top five are Denmark, the Netherlands, Sweden, New Zealand and the United States. Uzbekistan is 71st on the list. Among the former Soviet republics, Estonia (22nd), Latvia (27th) and Lithuania (30th) are the best performers. Kazakhstan (34th) is performing better than Russia (37th).
According to the report’s authors, the Allianz Pension Index (API) provides a comprehensive analysis of the sustainability and adequacy of pension systems. The index is based on three sub-indices, taking 40 different parameters into account which are rated on a scale from 1 to 7, where 1 is the best score.
The first API sub-index assesses the rate of demographic change, public debt and overall living standards, i.e. the structural preconditions that any pension system should consider.
The second API is the sustainability index which analyses the extent to which the pension system is prepared to mitigate the impact of demographic change.
The third API sub-index assesses the adequacy of pension systems by asking whether they provide a proper standard of living in old age. This includes benefit levels, pension system coverage, access to financial services and the integration of older workers into the labour market. At the bottom of this sub-index are Uzbekistan and Laos where “labour force participation remains relatively low, with parts of the population still lacking access to financial services”, says the report.
Uzbekistan received an overall score of 4.5 on the API index rankings, reflecting an average assessment: 4.4 for basic conditions, 3.6 for sustainability, and 5.3 for adequacy. High pension contributions (12-25%) are accompanied by a low gross replacement rate (55%), indicating a mismatch between contributions and pension benefits. The low coverage of the pension system (38%) is linked to high informal employment and limited access to formal financial services.
“The key to increasing the participation of older workers is greater flexibility in the transition from working life into retirement. This includes part-time work and allowing the acquisition of new (additional) pension rights whilst postponing retirement beyond the statutory retirement age. Other measures include the reduction of social security contribution rates for workers aged 60 and over, as well as temporary wage subsidies for hiring unemployed/workers age 60 and over”, says the report.
The report ranks Uzbekistan in last place in terms of activity rates among the elderly. With very low pensions, such low involvement can only have been the result of the worst old age discrimination.
According to Marina Kozlova of yep.uz, the minimum old age pension in Uzbekistan is 648,000 soms (around $50) which is enough for one or two trips to the supermarket and not much else. Men are entitled to their pension on reaching 60 years of age, having worked for at least 25 years. Women can claim their pension when they are 55 years old, having worked for at least 20 years.
