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Introduction of Pension Saving System in Georgia is Planned from October 1, 2017

Introduction of Pension Saving System in Georgia is Planned from October 1, 2017

Pension saving system in Georgia will be enacted from October 1, 2017.

It has become clear on public discussion “Pension Reform in Georgia”, held on Tuesday. The discussion was attended by World Bank, representatives of NEST, the British Regulatory Body for the Pension System and Deputy Prime Minister Dmitry Kumsishvili.

“This is extremely important reform, because pensions risks are increased through the time and the government will have to take care on more citizen’s pension. The government has decided to create mechanism, which will enable citizens to plan oldness well and not to be dependent merely on state allowances”, – Dimitri Kumsishvili declares. According to him, the pension should be determined to the citizens as of the wages, they have earned  through the years.

In addition, Dimitri Kumsishvili has declared that the reform should be designed correctly and the mistakes should be envisaged, which have been made in the Eastern European countries during the implementation of reforms. As of preliminary estimations, half of the employed population should be engaged in the system at the first stage. They expect to attract pension savings of 350 million.

According to the Ministry, pension reforms consist of two components:

Indexation of the social pension system, which envisages creation of a mechanism that determines how much the social pension should be increased. It is important that the social pension must be grown  in line of the inflation rate.

The reform also envisages introduction of new component, which is called private saving pension system, This reform is for future pensioners, which will significantly improve their provision. In addition, the pensioner will take two kinds of pensions in the future: social pension and private saving pension system. The system will enable the citizens of any age to join voluntarily.