The government wants to move to a retirement saving system in 2017 while the final version of the reform will be developed by the end of the year.
According to Otar Dzidzikashvili, head of the Pension Reform Service, a special group is working to balance the inflationary risks. Experts also have doubts on this subject, which provided information about the pension reform.
Along with the pension fund’s intensive work, the work is underway on enactment of the capital market new instruments, as the company should turn the accumulated funds into a source of income and carry out investment that is impossible at this stage without establishing a new instrument. Otar Dzidzikashvili informs that various versions are being discussed -what other tools can be created except for banking deposits, government and corporate bonds.
Otar Dzidzikashvili does not specify what models will be considered by the group.
As for the pension fund manager, Dzidzikashvili notes that it will be a foreign private company having an experience in similar fund management. At this stage, the negotiations have not launched yet with any company because the details of the reform are still being developed.
There has not yet been determined what percentage of the employee’s salary could be transferred to the pension fund, but the working group believes that the monthly amount should not be less than 6% of a wage in which the state and the employer will equally contribute their share. In this case, if 2% of the salary is transferred by the pension owner, an employer and the state will have to pay additional 2% -2%. As a result, 6% of the beneficiary’s salary will be transferred to the pension fund monthly.
Georgia currently has no retirement saving system. The state pays pensioners a pension in the amount of GEL 150.
Accumulative pension reform has been under development for several months. The World Bank (WB), Asian Development Bank (ADB), the Ministry of Economy are involved in the work. The Interagency Commission was set up with the participation of the Ministry of Finance, the Ministry of Health, the National Bank, etc.