OMM Redaksiyası
The Milli Majlis (National Assembly) has approved at first reading a bill aimed at improving pension mechanisms for civil servants, military personnel serving in the Ministry of Defense system and individuals receiving pensions based on their term of office. The bill also provides for applying a unified insurance principle.
Pensions to be calculated based on pension capital, not salary
“Operative Information Center-OMM” reports that the pension amounts of some categories are currently linked to the salaries or service-related allowances they received when they retired.
The proposed change would eliminate this link and establish pensions based on the pension capital accumulated in an individual’s personal account.
Accordingly, civil servants and military personnel would receive pensions under general rules. At the same time, instead of the additional mechanism based on length of service provided for under current legislation, a fixed monthly pension supplement is proposed.
For civil servants, the supplement would be determined according to administrative classification, while for military personnel it would be set according to military ranks.
Military personnel’s salary system also set to change
The new mechanism would also introduce changes to the payment system for military personnel of the Ministry of Defense.
According to information presented at the Milli Majlis, the new mechanism is expected to increase military personnel’s salaries by an average of 22.8 percent after taxes and other mandatory deductions. Up to 550 million manats in additional annual funding is planned for this purpose.
Under the new system, the base salary would be replaced by an official-position salary, while the share of the rank-based salary is planned to reach 70 percent.
Pension assignment to be digitized
The bill also provides for simplifying the pension assignment process.
If the new mechanism is introduced, civil servants and other eligible individuals will be able to receive pensions electronically without applying to administrative bodies.
Pension capital indexation to change
The bill also proposes changes to the indexation mechanism for pensions and pension capital recorded in personal accounts.
Currently, labor pensions are indexed in line with the annual growth rate of average monthly nominal wages nationwide. Pension capital, meanwhile, is increased in line with the consumer price index.
Under the new approach, differential indexation would be applied to higher-value pensions and pension capital. Lower-value pensions and pension capital would continue to be fully indexed under the existing rules.
One of the bill’s main goals is to strengthen the unified insurance principle in pension provision, simplify pension assignment and improve the financial sustainability of the State Social Protection Fund.
Following discussions at the Milli Majlis, the bill was put to a vote and approved at first reading.
