Decent Pensions Instead of Social Aid
31 October, 2013
Decent Pensions Instead of Social Aid
The Georgian Government plans to boost pension fund development in the country in order to ensure decent income for Georgian citizens at their higher ages, with sums much higher than the currently active pension rate that stands at subsistence minimum of GEL 150. But the question is, how to achieve the target with high unemployment level in the country.
“We have no real pension in the county today. What we have is a social aid to aged people and we
have to establish a real pension system in Georgia,” Nodar Khaduri, Minister of Finances, stated when commenting on the recent governmental initiative to boost pension funds in Georgia. “However this will be a long process.” The project launched by the end of 2012, when the newly elected Georgian Dream political coalition stepped into office. Details of the pension reforms are however not disclosed yet, as the governmental commission is currently chiseling them in close cooperation with the World Bank. As of now, the question is - whether or not government will tax employees by extra tax for pension funds or will deduce due payment from the already paid income tax. At any rate, the payment should be differentiated, Gigolashvili believes.
“If for instance, the state makes GEL 5 as an obligatory monthly payment for pension, it can be very big sum to those whose income is GEL 100 but very small who enjoys high salaries of GEL 2 thousand. This model should be implemented step-by-step in compliance with the economic development of the country and of course the now active pension GEL 150 should be kept to ensure minimal subsistence to disabled and socially vulnerable people,” Giorgi Gigolashvili, Head of Georgian Insurance Institute, explained to Georgian Journal.
But sector pundits believe this will be a complicated process against the backdrop of 15% unemployment level, i.e. 305 thousand compared to the 1.7 million employed, if hold to the 2012 statistics. More than that, only 662 thousand out of the 1.7 million is actually employed or are paid salaries whereas the remainder [exceeding million] is self-employed or makes its living through household agriculture in regions and scarcely manages to keep two ends together. As a matter of fact, there are five pension funds at insurance companies but they incorporate slightly over 18 thousand people or around 1% of all employees. And this portion is made by corporate clientele mainly from financial sector where salaries are high. But besides the high unemployment and low income rate the lack of trust in long-term money savings hampers the pension fund development in Georgia. The point is that pension fund principle requires average 4-5 decades of payments to pay a decent pension back, whereas a Georgian consumer tends to feel suspicion towards such a long-time investment. Besides, although the average salary of employed workforce stands at GEL 712 per month by the official statistics, the salary of the overwhelming majority employed in small business ranges from GEL 300 to 500 and edges downward yet more. On the other hand, banks offer more short-term and lucrative deposits exceeding pension funds yield by around 2-3% and people who can afford to save money prefer banking deposits to ensure quick and guaranteed returns rather than to wait 40 years for ambiguous profits from pension funds. Therefore, Gigolashvili, believes pension funds cannot develop unless the state gives an incentive through law and suggests state guarantees. Underdeveloped securities market is also a problem. It is a common knowledge that pension funds invest money is securities to witness higher profit and share this profit to its clients. Georgian government discusses the state securities as one of the key options to guarantee the state support and pay-back. But this increases the voluminous internal state debt that currently stands at GEL 1.5 billion. Davit Aslanishvili, securities market analyst, indicates that the only way out is to boost securities market too, to create investment opportunities in private sector.

Other Stories
Inovative and reliable online shop in Georgia -
Status of Georgia as a business and tourism interesting country is growing from year to year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
Georgia second among the fastest growing tourist destinations in Europe
Georgia is among the fastest growing tourist destinations in Europe. The data is published by the UN World Tourism Organization.
Bitmain launches world digital mining summit in Tbilisi, Georgia
Bitmain CEO Jihan Wu and Roger Ver, CEO of Head Speaker List featuring Circle, and Genesis Mining when Digital Mining Leaders Convene In Tbilisi on September 21-23
TBC Bank and Gazelle Finance have teamed-up to support Medical City, a leading healthcare provider in the western region of Georgia to launch the Western Regional Center Of Modern Medical Technologies.
Equiavlent to buried treasure – resources that are underused in Georgia
For 2018 the IMF Commission has forecast an annual economic growth for the Georgian economy of about 5,5%.
Does the quality of Georgian wine increase and how the export affects it
If we look at the data collected about modern Georgian wine, we will find out that the Georgian wines produced between 2015-2017 are much better in terms of their quality and Oenologic features rather than the wines produced between 2009-2011.
Japan simplifies the visa requirements for Georgian citizens
Diplomatic and economic relations between Georgia and Japan are now moving to a new phase. Recently Japan has decided to simplify the visa requirements for Georgian citizens.
M&S (Marks and Spencer) and H&M collections to be produced in Georgia
Garments manufacturer MGMTEX will start production of the M&S and H&M trendy collections from this September.
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Exchange Rates
GEL Exchange Rate
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
November 2018
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30