Gov't to Set up Georgian Pension Agency
A Pension Agency is to be created in Georgia to administer and manage the ‘Accumulated Pension System’ prepared by the Ministry of Economy with the Ministry of Finance and the National Bank of Georgia in November 2017.
The legislative package on pensions, which consists of 11 draft laws, has already been submitted to Parliament.
The draft law determines the rule and amount of pensions, and envisages establishment of a legal entity of public law: the Pension Agency, which will be administered by a supervisory board.
The Supervisory Board will consist of three members of the Government of Georgia and a Chairman of the Investment Board.
The Supervisory Board will appoint a Director for the Agency, who will be responsible for implementing the administrative activities of the agency, planning of the budget and communicating with third parties, carried out in cooperation with the Supervisory Board.
As a result of the planned changes, an Investment Council will be set up within the Pension Agency which will determine the investment policy itself. The Council will be composed of five members, with candidates elected by the Parliament of Georgia.
The project states that the Investment Board is responsible for monitoring the activities of the investment and senior investment officer. It will also be tasked to monitor the activity of asset management companies in order to ensure the protection of pension assets.
The new pension system will be activated in Quarter 3 of 2018 and envisages a cut of 2% of people’s monthly income and the saving of that money for their pension.
Under the new pension reform, all employed citizens of Georgia up to 40 years (around 500,000 people), will 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 employee's salary will go to a pension fund.
The pension program covers citizens of Georgia, foreign citizens permanently residing in Georgia, or 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.
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) 180 GEL.
Georgia’s Economy Minister, Dimitry Kumsishvili stated that the pension reform will create the opportunity to accelerate the economic growth of the country and provide decent lives for old people.
“This is one of the most important reforms to be implemented in Georgia,” he added.
Thea Morrison