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Pensions with Strings Attached

The local authorities in Turkmenabat have found an unusual way to show that the private sector is booming: they are forcing pensioners to sign up as small businessmen and making them pay for a license to operate.
By IWPR
Several residents of the city of Turkmenabat described how they reluctantly found themselves classed as entrepreneurs. And the experience of Ekaterina Uvarova, Kakabai Orazov, Dmitry Sleptsov and Maygozel Durdyeva mirrors that of many others applying for a state pension.



The city’s welfare service and the tax office appear to have reached an agreement that will help swell the official statistics for private-sector business development. If an applicant for a pension does not possess a voluntary pension insurance document, officials refuse to sign them up, even though this is in contravention of pension legislation from February 2006.



If the applicant shows up at the welfare office without this document, they are sent off to the taxation service, where they are made to sign a contract stating that they wish to be a private entrepreneur and then pay for a business license costing 180,000 manats, about nine US dollars at the commercial rate. The contract is usually valid only for a few months. Then they are allowed to draw up a voluntary pension insurance contract, for which they need to pay another fee. Only after that can they go back to the welfare office to register and receive their pension.



The welfare and tax service are clearly in cahoots in this scheme.



Government agencies use other methods to make it harder to obtain pensions, or reduce the size of payments. Under the new pension law, citizens whose total length of service prior to 1998 is less than 25 years for men and 20 years for women are not eligible for any pension.



Since 2006, a pension application needs to show evidence of 10 years’ paid employment at the same company. The requirement used to be for five years’ service, and before that two years. Given current levels of unemployment, very few people have this kind of work record.



All these infringements of pensioners’ rights are taking place to serve the bureaucratic machine. Local observers say these measures are designed to please central government and the president, who are keen to see rosy statistics and budget savings.