Kyrgyzstan may need more systemic and deeper pension reform to support growth. Asian Development Outlook April 2023 says.
It is noted that the current pension system is expensive and complex. Problems remain despite decades of reform. Dependence on the state budget for financial sustainability persists. State transfers cover more than 40 percent of the pension fund’s expenses. Another problem is the high rate of deductions of 27.25 percent, combined with relatively low payments.
Kyrgyzstan spends about 9 percent of GDP on the pension system with a relatively young population.
If the problems in this area are not solved, it can aggravate the level of poverty in the country. The ADB stresses that the Cabinet of Ministers has already developed several initiatives to solve the problem last year. But deeper reform is needed.
«The measures will promote sustainability by creating a simpler and more transparent pension system that will be easier to administer. Reform aimed at encouraging greater participation and compliance would reduce private sector costs and the financial burden on the state budget. The Cabinet should do more to address the issue of adequate pensions,» said Gulnur Kerimkulova, senior economist at ADB Resident Mission in Kyrgyzstan.
