Deputy Economy Minister Nino Javakhadze stated that the new pension system will initially cover around 500-600 thousand Georgians who have reached 40 years of age.
Accumulated pension to involve 500-600 thousand Georgians
By Tea Mariamidze
Thursday, November 9
The accumulation pension reform, which will come into play in 2018, envisages cutting two percent of people’s monthly incomes and saving the money on their pension accounts.
The bill reads that people up to 40-years-old will be obliged to accumulate their pension, while people over 40 will have a choice whether to be involved in the scheme or not.
As for self-employed people, they can decide whether to use the program or not. In case they want to accumulate their pension they will have to put four percent of their monthly incomes into the scheme.
However, the Deputy Economy Minister says that self-employed people have to show their income to the state, in order to have access to the pension system.
“We need to see people in the system and their earnings in order to calculate their income. Consequently, people who are in the system like fixed taxpayers, individual entrepreneurs, etc. will be able to participate in the program," Javakhadze said.
The Deputy Minister added that the number of employees or hired people is about 700,000 while the total number of self-employed is more than a million.
The pension reform bill was prepared by the Ministry of Economy, Ministry of Finance and the National Bank, with the support of foreign donors, and it reads that all employed citizens of Georgia up to 40 years, which is around 500,000 people, will transfer 2% of their untaxed monthly salaries in the state pension fund, another 2% will be paid by employers and 2% by the state. This is 6% of a person’s untaxed salary in total.
The sum accumulated in the state pension fund will be disposed by the Investment Council. The council will be appointed by a special commission, made up of the Finance Minister, Economy Minister, Labor Minister, also one MP and one independent member presented by the National Bank.
The Investment Council will decide how to use the money of pension fund, however, it is not specified yet where exactly the people’s money will be invested.
The opposition claims that the government may misuse the people’s money and demand extortionate guarantees.