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The State Great Khural (Parliament) has approved the Government’s Pension Reform Law with 85.9% support, introducing one of Mongolia’s most significant social insurance reforms in recent years. The legislation, which will take effect in phases beginning 1 January 2027, aims to establish a fairer pension system by strengthening the link between lifetime social insurance contributions and retirement benefits while expanding pension coverage and employment incentives.

Key Provisions of the Reform:

🔹 Introduction of a Universal Base Pension

Beginning 1 January 2027, approximately 435,000 pensioners will receive a newly established base pension ranging from MNT 100,000 to MNT 300,000, depending on their employment history and current pension level.

🔹 Revised Pension Calculation Method

From 2033, pensions for contributors under the individual account system will be calculated based on the average salary earned over the highest 10 years, replacing the current methodology. The amendment is intended to prevent a significant decline in pension benefits for future retirees.

🔹 Stronger Incentives to Remain in the Workforce

Individuals who continue working after reaching the statutory retirement age will receive a 4% annual increase in their monthly pension. Conversely, those who opt for early retirement will face a 4% annual reduction in pension benefits.

🔹 Introduction of Voluntary Private Pension Savings

The reform establishes the legal framework for voluntary private pension funds, allowing contributors to accumulate additional retirement savings with government support mechanisms, creating a supplementary source of retirement income.

🔹 Social Insurance Relief Measures

The legislation also introduces several measures aimed at promoting employment and expanding social insurance participation, including:

• Exemption from social insurance contributions for students engaged in part-time employment;

• Temporary employer contribution exemptions for small businesses with 1–5 employees for up to 36 months under specified conditions;

• Allowing individuals with multiple jobs to pay social insurance contributions through a single employer of their choice;

• A 50% contribution discount for informal sector workers who voluntarily join the social insurance system.

Policy Significance

The reform is designed to enhance the sustainability of Mongolia’s pension system while improving retirement income adequacy and broadening participation in formal social insurance. By linking pension benefits more closely to contribution history and introducing private pension savings, the legislation seeks to strengthen long-term retirement security and encourage continued labor force participation.

💡 Ard Insight

The reform is expected to strengthen the long-term sustainability of Mongolia’s pension system by linking benefits more closely to lifetime contributions while introducing voluntary private pension savings. Over time, this could also support the growth of institutional investment and deepen Mongolia’s domestic capital market.

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