Over the past months, we have been asked several times questions about the upcoming pension reform. Here are some answers.
For whom is the contribution to the fund mandatory? Who can join/contribute to the fund?
All those individuals who receive their salary net of taxes because their employer pays the income tax for them are automatically enrolled in the fund. Those who are 40 or more years of age will have – after 3 months in the fund – the possibility to opt out. However, this “window” to opt out will close after the 5th month in the fund. Those who a...
ISET Economist Blog
A blog about economics in the South Caucasus.
Dec
11
Sep
05
Starting from October 1, 2017, a private retirement savings system will be launched in Georgia as part of a broader pension reform. This reform has been discussed by Nino Doghonadze and Yaroslava Babych in Decent Income in Old Age: Georgian Dream or Reality? on the ISET Economist. Today we will focus only on one very interesting aspect of the reform – the “opt-out” principle and its implementation in the Georgian realities.
WHAT’S IN THE “OPT-OUT”?
The proposed private retirement savings system is based on the “opt-out” principle, according to which...
Recent Comments
A very good point about timing, Simon! Indeed, combined with the corporate tax reform, the pension reform has better chances of pa... Read More
Sunday, 17 April 2016 2:02 PM
The pension reform is inspired by the systems used in Australia, Hong Kong and Chile. In each case, they are mandatory systems wit... Read More
Sunday, 17 April 2016 8:08 AM
In other jurisdictions, government makes no grants at all to private pension funds (unless talking about mandated employer contrib... Read More
Sunday, 17 April 2016 3:03 PM
Jun
20
WHEN SUCCESS SPEAKS TOO LOUDLY
In November 2015, the National Audit Office of the UK has published a report saying: “The Department for Work and Pensions has successfully introduced automatic enrolment to workplace pensions for large and medium-sized employers.” The National Audit Office found that 58,000 employers have enrolled 5.4 million workers between October 2012 and August 2015. The huge increase in enrolment was due to a small policy change introduced by the UK government in October 2012. The Government switched the default option from one i...
Recent Comments
This is completely innovative way to re-think about government policy. It has been thought that the main instruments of government... Read More
Monday, 20 June 2016 9:09 AM
Magnificent. I pasted out the charts. Obviously, the UK idea is groundbreaking and can hardly be applied in Georgia....although it... Read More
Wednesday, 22 June 2016 1:01 PM
Dec
20
On the first of January, Armenia will adopt an entirely new pension system. This radical reform addresses two problems: widespread poverty among the elderly and a lack of capital in the economy. The very same problems also exist in Georgia, where the standard governmental pension currently is 150 lari, and where the economy is suffering from high capital costs due to notoriously low saving rates. So, it is worthwhile to have a look at what is going on in our neighboring country Armenia. Georgian decision makers may learn important lessons from their expe...
Recent Comments
If it is true that 80% of funds are going to be invested in Armenia, I wonder how is the riskiness scale measured. At the same tim... Read More
Friday, 20 December 2013 10:10 AM
I wonder what does government guarantee mean and how losses are capped, or what is "government" money.
It is very difficult refor... Read More
Tuesday, 14 January 2014 10:10 AM
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