Georgian Opposition Criticizes Government-Initiated Pension Draft

Georgia’s opposition parties disapprove of the new government-initiated draft law on state pensions, already submitted to the Parliament.

Otar Kakhidze, from the parliamentary opposition European Georgia, says the changes will reduce the salaries of the citizens.

“If this reform was useful and good, it would not be mandatory. The draft will reduce the salaries and as well obliges employers pay for their employees’ pension, this will increase unemployment too,” he stressed.

The MP stated that implementation of such a reform, which envisages introduction of new tax, contradicts the constitution of Georgia, because the referendum on this issue must be held.

“It is not permitted to introduce new tax without a referendum,” he added.

Deputy Finance Minister Nikoloz Gagua says that the government has introduced no new tax and there is no need to ask people about the pension reform.

He added the reform is necessary to ensure that all elderly people get a decent pension.

“People will not be allowed to use their accumulated money until they reach the pension age,” Gagua added.

Deputy Finance Minister presented the draft law on pension to the Legal Committee of Parliament on February 15 and it was supported by the committee.

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.

If a self-employed person decides to accumulate the pension they will have to put 4 percent 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) 180 GEL.

By Thea Morrison

Related story:

Gov't to Set up Georgian Pension Agency