New Pension Laws Kick In January 1

From January 1, several new laws will come into force in Georgia, including an increase in the monthly pension amount by 20 GEL and the first part of the law on accumulative pensions. The monthly pension amount in Georgia is now 200 GEL ($75).

The law on accumulative pensions was hotly debated for several months in 2017 and 2018, and finally adopted by Parliament on July 21, 2018. It has several phases – the first phase will enroll all people working in Georgia under the age of 40, apart from self-employed people, into the new pension scheme. Workers 40 years and older and self-employed people can choose to voluntarily participate. Enrollment is mandatory for those under the age of 40, but in June 2019 an opt-out provision will be introduced.

The new pension system is designed to give Georgians a retirement savings account that is more proportional to their earnings while they were working by taking a percentage of their pre-tax salary. The pension fund will be invested within Georgia.

Employees contribute 2% of their pre-tax salary, the employer contributes an amount equal to 2% of the employee’s pre-tax salary, and the government contributes an amount equal to 2% of the employee’s pre-tax salary. One exception, however, is when an employee’s salary is greater than 24,000 Lari ($8,888) per year, in which case the government contributes only 1%, or when an employee’s salary is greater than 60,000 Lari ($22,222) per year, in which case the government does not contribute.

By Samantha Guthrie

Photo: Simba Law