Tajik pensioners often do not know the size of their pensions and do not understand the system used to calculate them. Experts suggest allowing non-state, voluntary pension funds and talk about the need to increase pensions.
There are several laws regulating pension provision in Tajikistan. One of them is the law “On Insurance and State Pensions. In general, there are now two types of pensions: insurance (formerly known as labor) and state (social) pensions.
The right to receive an insurance (labor) pension appears upon reaching a certain age and a minimum length of service.
The size of the insurance pension is determined by a very complex formula, which takes into account length of service, official wages, insurance contributions, inflation, etc. For this reason, the figures are different in each case, that is, the insurance pension is individual.
Many pensioners do not know how their pension is calculated, and they sometimes just accept the amount assigned to them by the Social Insurance and Pension Agency under the Government of Tajikistan.
Teacher Kalandar Jumaev, a 64-year-old resident of the Ayni district, says that despite 40 years of service, his pension is only 403 somoni (about $40).
After Dzhumaev submitted all the necessary documents to the district’s pensions department, he was told that his pension would be 379 somoni ($33.51).
“I asked in response, ‘Is this really such a pension for 40 years of work? I paid more to the budget during that time! I was told that this is the law,” says Kalandar Dzhumaev.
In September, his pension increased slightly and he now receives 402 somoni (33.54).
“Of course, this is not much if you consider the market prices. Even two sacks of flour are not enough. Fortunately, the children have gone to migrate and they provide for us,” Kalandar Jumayev said.
An official of the Social Insurance and Pension Agency under the government of Tajikistan, who wished to remain anonymous, told the analytical portal CABAR.asia that the law provides for pension payments for 180 months.
“This means the legislature has decreed that a person in Tajikistan must live on pension for an average of at least 15 years,” the source said.
The retirement age is 63 years for men and 58 years for women. Meanwhile, according to government statistics, the average life expectancy in Tajikistan is about 75 years.
Thus, by this indicator alone, men in Tajikistan will not be able to fully use the funds provided by the state, because on average they die 3-5 years earlier than the age established by law.
The number of pensioners is higher and pensions are the lowest in the CIS
The number of pensioners in Tajikistan grows each year. Dilmurod Davlatzoda, head of the Agency for Pensions and Social Protection, said at a press conference that the total number of pensioners in the country by the end of the first half of 2021 was over 734,000, more than 5,000 more than at the beginning of the year.
Tajik pensioners currently receive an average monthly pension of about 319 somoni (approximately $35 USD). This is half the average pension in Kyrgyzstan ($75) and three times lower than the average pension in Moldova, Turkmenistan, and Armenia ($110, $104, and $100, respectively).
The highest pensions in the CIS are in Kazakhstan ($216) and Russia ($205). This is approximately six times higher than the average pension in Tajikistan. In Uzbekistan, the pension is $70.
Dr. Naimjon Shoasalov, candidate of economic sciences, in his PhD thesis “Improvement of the pension system and prospects of its development in the Republic of Tajikistan”, defended in 2021, confirms this and argues, “these pension rates cannot but affect the living standards and well-being of pensioners”.
To address this issue, he proposes a pension reform, which should create a non-governmental pension fund in the country, which can be classified as a pension of the third level or voluntary.
The author notes in his dissertation that the introduction of private pensions is expedient in the conditions of Tajikistan and has many advantages, the practical implementation of which is not without benefit.
Distinguishing features of compulsory state and non-state pensions
Table from Naimjon Shoasalov’s dissertation (translated from Tajik)
Pension increases. What does inflation say?
Almost every year, Tajik President Emomali Rahmon talks about increasing pensions. For example, in his annual message to parliament on January 26 this year, the president said that in September 2021, pensions would be increased by 20 percent for childhood disability and by 50 percent for people with disabilities of the first group.
Note that the inflation rate in 2020 (9.4) was much higher than in previous years when it was at 6-7 percent. This year, inflation is projected at 6.9 percent.
Thus, part of the increase in pensions will go to cover inflation.
Naimjon Shoasalov writes in his research paper that the cost of the consumer basket increased 1.6 times between 2010 and 2018 (by 237.94 somoni – about $21.5) and the average pension increased 2.7 times (by 197.29 somoni – about $17.5).
“The effectiveness of the pension system is understood to mean such pension payments that will provide pensioners with a decent standard of living and at the same time the fulfillment of pension obligations will not lead to negative consequences for economic development,” writes Naimjon Shoasalov.
Pensions for Labor Migrants
Another controversial and still unclear issue in Tajikistan is the pensions of migrant workers, many of whom work in Russia.
According to the Main Directorate for Migration of the Russian Ministry of Internal Affairs, more than one million Tajik citizens live and work in this country. According to the Central Bank of Russia, the average amount of remittances sent home by Tajik migrants is about $150. This is slightly more than the monthly salary in Tajikistan, which is $134 (1,522 somoni).
At the same time, some Tajik citizens officially working in Russia make the required tax payments to the Russian Pension Fund.
At the end of July, the Russian government approved a draft agreement between Russia and Tajikistan on cooperation in pension provision.
Under the agreement, insured citizens (and their family members) of one country can apply to transfer their pensions to the territory of the other contracting party. Russian Prime Minister Mikhail Mishustin instructed the Russian Labor Ministry and the Foreign Ministry to hold talks with the relevant Tajik ministries to sign an agreement on cooperation in the field of pensions.
The draft has been under development since 2016, but the Russian side has repeatedly returned it for additions and corrections. The latest version of the draft agreement states that each side will set pension payments based on insurance experience gained while working in the country.
It is expected that Tajik migrant workers’ pensions will be paid from contributions paid by their employers. Russian employers are obliged to make a 22% contribution to the Pension Fund for each foreigner officially registered in their company (similarly for citizens of Russia itself).
Dilmurod Davlatzoda said at a press conference in July that the government is currently discussing a draft pension agreement.
However, many of our migrant workers, most often so-called seasonal migrants, work in Russia without registration with an employer and, accordingly, in old age due to lack of the necessary work experience can only hope for a social pension.
In his dissertation, the candidate of economic sciences Naimjon Shoasalov also touched upon the issue of pension provision for labor migrants, noting that “the average length of service in Russia for citizens of Tajikistan is currently only 5 years, which is not enough to reach the retirement age.
He writes that raising the retirement age for men to 65 and for women to 63 deprives migrant workers of the right to a pension, violates their rights and obligations, and is unfair to them.
“Because most migrants use their abilities, knowledge and skills to work hard in difficult and unbearable conditions, for which they receive miserable pay,” Naimzhon Shoasalov notes.
We need to raise pensions, not the retirement age
At a recent press conference, Dilmurod Davlatzoda, head of the Social Security and Pensions Agency under the Government of Tajikistan, said that his agency proposed raising the retirement age from 63 to 65 years for men and from 58 to 60 years for women. Many government agencies, including the Ministry of Labour, Migration and Employment, opposed such changes.
Experts also consider the proposal to raise the retirement age as unfounded. The main reason for the increase is the ratio of workers to pensioners. According to the methodology of the International Labor Organization, for every pensioner there should be not less than three workers on average.
In Tajikistan today, there are about 3.5 workers per one pensioner, which is more than enough. The number of pensioners, according to official statistics, at the beginning of the second half of this year is 734 thousand people; the official number of workers in the country is 2.5 million.
“We have a young population, perhaps one of the youngest in the world, the average age is 25. More than 60% of the country’s population is able-bodied, and the number of pensioners is less than 5% because of low life expectancy,” said economist Akbar Saidov.
According to him, even if we take into account that some citizens work abroad, the pension fund should be enough to cover all the costs of pensions at the expense of those who work inside the country.