International Monetary Fund Supports Georgia's Pension Reform

International Monetary Fund (IMF) supports Pension Reform of Georgia. The statement was made by Francois Painchaud, IMF Resident Representative in Georgia.

He believes the reform it will help people who are employed in Georgia to gather more money and provide themselves with pension at the pension age.

“Pension reform will also promote capital market development and it will enable us to invest in different directions,” he said, adding that it is very important that the pension system has a good reputation.

“This may take some time, but people should make sure that accumulation is the right way for a successful reform," said Painchaud.

The Accumulative Pension kicked off on January 1, 2019. It was adopted by the Parliament on July 21, 2018 which says that participation in the program is mandatory for legally employed people under 40, meaning they will be enrolled automatically, and voluntary for people above 40 as well as for self-employed citizens.

All employed citizens of Georgia 40 and under (around 500,000 people), transfer 2% of their untaxed monthly salaries to the state pension fund, with another 2% to be paid by employers and 2% by the state. This means that every month, 6% of employees' salaries go to the pension fund.

The pension program covers citizens of Georgia, foreign citizens permanently residing in Georgia, and those having no citizenship but who are employed or self-employed and receiving an income. Self-employed people will have a choice to pay into their pension or not.

If a self-employed person decides to accumulate the pension, they will have to put 4% of their monthly incomes into the pension fund.

After the money is accumulated in the pension budget, the money will be used by the State for investments within the country. When people reach pension age, 65 for males and 60 for females, they will have an opportunity to use the money, together with their state pension of (currently) GEL 200 ($75).

By Thea Morrison

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