From 2021 to 2025, the first phase of the pension system reform was implemented in Kyrgyzstan, aimed at strengthening financial stability and improving the living standards of citizens.
Key Achievements:
Increase in Pensions:
The average pension amount increased from 6,186 to 11,238 soms over the last five years, which corresponds to nearly a twofold growth. In 2024, an important decision was made to raise the minimum pension amount to the level of the subsistence minimum.
Financial Expenditures:
In 2021, 51 billion soms were allocated for pension payments, while by 2025 this amount increased to 110.3 billion soms.
Digitalization:
An automated information system of the Social Fund was implemented, ensuring a complete transition of pension recipients to electronic payments through banks and post offices. The "Tündük" system allows for data exchange with 17 government agencies, significantly reducing bureaucratic procedures and the need for multiple certificates.
Legislative and Social Initiatives of the First Phase of Reform
A new law, adopted in 2024, introduced several benefits and changes:
Full accrual of the basic part of the pension.
For disabled individuals of group III, the insurance part of the pension is established in full.
The age for receiving a pension in case of the loss of a breadwinner for children has been increased from 16 to 18 years.
The period for receiving unclaimed pensions has been extended from 3 to 5 years.
Effective Use of Accumulations:
The investment opportunities of the State Pension Fund have been expanded, including permission for placement in gold and precious metals. Citizens can now use their accumulations for a down payment on a mortgage, participation in shared construction, or treatment for serious illnesses.
Support for Entrepreneurship:
The rates for insurance contributions for businesses have been reduced from 27.25% to 12.25%, which has facilitated the legalization of the economy and the creation of new jobs.
Thus, the first phase of the reform led to the creation of a transparent, financially sustainable, and digital pension system.
Plan of Tasks for the Second Phase of Reform until 2045
The second phase of the pension reform covers the period from 2026 to 2045 and aims to strengthen the financial stability of the system, as well as to ensure a decent pension for every citizen based on their contributions.
Priority Areas of the Second Phase:
Strengthening Insurance Principles:
Work will continue on the legalization of the economy and increasing formal employment, and it is planned to increase the revenues of the Pension Fund through the optimization of non-tax revenues.
Digital Transformation:
The accounting of insurance experience and citizens' incomes will be transferred to a digital format, which will allow for the automation of pension assignments without citizen involvement.
Parametric Reforms:
The system will adapt to demographic and economic changes, which is necessary to fulfill obligations to future pensioners.
Development of the Accumulative Component:
Mechanisms to increase citizens' interest in pension savings and improve profitability will be enhanced.
The key task of the second phase is to achieve 100% coverage of the economically active population by the social insurance system and minimize the pension system's dependence on external subsidies.
Automatic Pension Assignment upon Reaching Retirement Age
Starting from July 1, 2026, a new service for the automatic assignment of pensions for citizens reaching retirement age will come into effect. One month before the birth date when a citizen reaches retirement age, the necessary data will be automatically collected through state information systems, and the pension assignment process will occur without personal application.
The new mechanism will allow the Social Fund to integrate with the information systems of other agencies and receive information about citizens (work experience, personal data, etc.) in electronic format. With complete and accurate data, the pension will be calculated automatically, and a notification of its assignment will be sent through the "Tündük" application. The notification will offer the option to choose a bank for opening an account, with the details being processed automatically, without citizen involvement.
Automation will also extend to the assignment of pensions for disability, which will help reduce the time citizens spend on document collection and increase the transparency of public service provision.
Change in Requirements for Minimum Work Experience
In Kyrgyzstan, the requirements for minimum experience for pension assignment have been revised, with corresponding changes made to the legislation in 2024.
Previously, to receive a full pension, women needed 20 years of work experience upon reaching 58 years of age, and men upon reaching 63 years. In case of insufficient experience, a partial pension was assigned.
Starting from July 1, 2024, the concept of "minimum experience" has been introduced, which is now only 5 years for full pension assignment.
From January 1, 2026, the minimum experience will be set at 6 years and will increase annually. According to the plan, by 2045 it will reach 20 years and remain at that level.
Goals of the Changes:
- Sustainability of the pension system;
- Encouragement of official employment and payment of insurance contributions;
- Fair calculation of pension rights based on work experience and contributions;
- Reduction of informal employment and regulation of pension provision.
The overall goal of introducing a minimum experience is aimed at legalizing the activities of citizens and entrepreneurs working without official registration and evading tax payments. Those who strive to receive a decent pension in old age need to be officially employed and accumulate the required minimum experience. It is expected that citizens will approach their future and pensions more consciously from a young age.
