Population Ageing and Pension Adequacy in Turkmenistan

Is the Pension System Ready?

Turkmenistan is undergoing a rapid demographic shift that threatens the long-term sustainability of its pension system. As fertility rates decline and the number of citizens aged 60 and above grows relative to the workforce, population aging has emerged as a critical structural challenge. UN projections indicate that the population over age 65 will nearly triple by 2050 – rising from 366,302 (4.8%) in 2025 to over 1 million (10.8%). Most notably, the share of 80+ year olds, who are most dependent on stable pensions, is expected to more than quadruple. While these trends reflect improved longevity, they raise urgent questions regarding the equity and adequacy of Turkmenistan’s pension, healthcare, and long-term care systems.

Social Protection Spending and Coverage Gaps

According to the United Nations Country Analysis 2025, Turkmenistan allocated 4% of its GDP to social protection and the Pension Fund in 2024. Social transfer adequacy and coverage remain limited and have been declining among the poorest households, from 65.1% in 2019 to 61% in 2024. This leaves nearly 40% of the poorest households without any social benefits or pensions. Access to social protection also differs across regions among the poorest: exclusion ranges from 29.2% in Lebap to 45.6% in Dashoguz, increasing the risk of poverty among older people and other vulnerable groups. 

Health expenditure remained low, falling from 1.4% of GDP in 2023 to 1.3% in 2024. According to the World Health Organisation(WHO) data, households paid a staggering 79.2% of health costs out of pocket, while public spending covered only 17%. This reliance on private funding is among the subregion’s highest and contrasts sharply with the public spending levels of Turkmenistan’s peers: 53% in upper-middle-income countries and 68% across the WHO European region.

At the same time, the poorest households spend around 68% of their income on food, leaving many people with very little resources to spend on medicines and treatment. This is particularly challenging for older people living on small pensions who face difficult choices between essential needs and medical care.

The declining adequacy of social transfers, combined with high out-of-pocket health costs and rising food expenditures, raise concerns under the Leaving No One Behind (LNOB) principle. It suggests that current conditions are falling short in protecting older people from poverty and are limited in their capacity to address population aging and rising chronic disease.

Retirement Age and Pension Adequacy Risks

Compared to its neighbouring countries, the retirement age is relatively low in Turkmenistan – 57 years for women and 62 years for men – with a minimum of 5 years of contributions required for eligibility. At the same time, the country’s low life expectancy (69.5 years), which is the lowest in Central Asia, may limit the time older persons can benefit from their retirement.

The minimum pension is currently 550 manat ($28 at the black market rate), falling below the poverty line. This vulnerability is compounded by the discontinuation of the 10% annual increase in 2025, which has eroded the real value of social insurance. Consequently, many elderly citizens remain financially insecure despite being covered by the formal pension system.

Evolution of the Pension System Since Independence

In the years immediately following the collapse of the Soviet Union, several countries in Central Asia reformed their pension systems to improve the well-being of older people. However, Turkmenistan preserved the conventional PAYG (pay-as-you-go) pension scheme, characterized by low retirement ages and financing based on workers’ mandatory contributions used to pay the pensions of current retirees.

A major reform took place in 2012 when Turkmenistan adopted the Law on State Pension Insurance, which introduced a national pension insurance framework and established the Pension Fund of Turkmenistan under the Ministry of Labor and Social Protection of the Population. This framework was complemented by the Code on Social Protection of the Population and the introduction of a Notional Defined Contribution (NDC) program in which benefits are calculated based on individual contribution records stored in notional accounts.

Article 3 of the Law on National Pension Insurance defines three main components of pension insurance:

• Mandatory pension insurance provides pension benefits financed through mandatory pension contributions paid by insured persons to the Pension Fund.
• Mandatory professional pension insurance provides pension benefits to insured persons eligible for retirement based on length of service or employment in special (hazardous or arduous) working conditions and is financed through mandatory professional pension contributions paid to the Pension Fund.
• Voluntary pension insurance provides additional pension benefits through voluntary pension contributions under a contract concluded between an individual and the Pension Fund.

The Structure and Functions of the Pension Fund

The Turkmen pension insurance system is administered through the Pension Fund of Turkmenistan. It maintains the State Register of insurers-payers of pension contributions including employers, entrepreneurs and self-employed contributors. It performs both administrative and supervisory functions in relation to contribution compliance (Art. 9; Art. 15). 

At its core, the Fund, together with its local bodies, is responsible for fulfilling obligations toward insured persons. Contributions for mandatory pension insurance and mandatory professional pension insurance are paid into the budget of the Pension Fund. These funds are explicitly defined as state funds (Art. 35).

The Fund’s budget is earmarked for:

• pension provision for insured persons;
• reserve formation;
• other social protection purposes;
• financing the administration of the pension system;
• supporting the financial sustainability of the pension system (Art. 35).

Thus, the Pension Fund operates as a centralized pooling mechanism within the state social protection system.

Pension System Reality Check

On paper, Turkmenistan’s legislation on state pension and social protection clearly defines the structure of the pension insurance system and the Pension Fund’s responsibilities. However, in practice, important gaps remain. Lack of publicly available information to monitor the management of the Pension Fund’s resources, such as regular financial reports or contribution statistics, makes it challenging to assess how well the system is prepared to support a rapidly growing aging population. Such transparency is critical for providing social stability and protecting the most vulnerable elderly population and persons with disabilities from poverty.

At the same time, the pension system, as currently structured, is predominantly financed through employer contributions, with little participation of individual savings mechanisms. This existing setup is insufficient to ensure adequate income in old age, to generate significant additional savings for the country’s economic development, or to respond effectively to long-term demographic pressures associated with population ageing.

According to the United Nations Country Analysis 2025, the sustainability of social protection is under threat from fragmented budgeting, dual exchange rates, and a lack of routine indexation. These factors erode the real value of pensions and benefits over time. Left unaddressed, this decline forces vulnerable groups into negative coping strategies – such as migration and debt – while undermining health, nutrition, and productivity. Ultimately, these pressures risk reversing progress toward SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities).

Overall, the Turkmen government faces an urgent policy challenge. To ensure a dignified life for its aging population, the state must address the erosion of pensions, the lack of cost-of-living indexation, the heavy burden of out-of-pocket healthcare and increasing food costs. Without these reforms, social protection will remain insufficient to meet the needs of the country’s most vulnerable citizens.