A Pension reform was initiated by the Government of Georgia and entered into force on January 1, 2019. This scheme consists of the activation of a so-called "funded pension", to which everyone will make a minor contribution - the employee, the employer and the state treasury.
Participation in the new scheme contributions is mandatory and is imposed on employers, resident persons, citizens of Georgia, foreign citizens and stateless persons permanently living in Georgia. Those who have already reached 40 years of age by 6 Aug 2018 (when the new law was initially announced) will have the option to withdraw contributions from the pension scheme between 1 April and 31 May 2019 and receive back the contributions for preceding months.
Another important point of this scheme is that, a woman with a permanent job who has, as of January 1 2019, not yet turned 55 years, as well as men from the same category, who have not yet turned 60 years, will be automatically included in the new pension scheme. Older employees are given the opportunity to be included on a voluntary basis.
A depositor will be able to receive back pension contributions before reaching the retirement age in case of withdrawal from Georgian citizenship or changing the permanent residency, as well as in case of disability. In the event of death, the legitimate heir of the depositor will receive the pension contributions.
The total percentage of the installment varies from 4% to 6%, depending on the annual taxable salaries and / or self-employed income.
|Amount of salary and / or self-employment income [GEL]||Amount to be contributed by an Employer [%]||Amount to be contributed by an Employee [%]||Amount to be contributed by the state [%]||Total[%]|
|Below 24,000 GEL||2||2||2||6|
|>24,000 and <60,000||2||2||1||5|
|Exceeding 60,000 GEL||2||2||0||4|
Payments from the fund to the depositor will commence after the employee reaches the retirement age (currently 65 for males and 60 for females) and once the depositor submits an application to the Pension Agency.
Given the importance of the reform and its wide-reaching impact, we encourage Georgian businesses to seek immediate assistance in ensuring compliance with the new scheme and evaluate and adjust their current payment practices.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.