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Employees under 40 in Georgia may soon be obliged to participate in a cumulative pension scheme, if a proposal drafted by the Ministry of Economy and National Bank is approved by parliament.
The scheme would guarantee an investment of 6% of a person’s income after tax into their pension, with 2% contributed each by employees, employers, and the state.
According to the proposal, those turning 40 before it is approved will still be able to sign up for the scheme voluntarily. Self-employed people will also be able to opt in regardless of their age, paying in 2% their net income, which will be matched by the state.
Deputy Finance Minister Nikoloz Gagua claimed on 31 October that ‘all payments will be tax free, which is quite unprecedented worldwide’, Netgazeti reports.
The reforms will concern Georgian citizens, foreign citizens permanently residing in Georgia, and non-citizens who are employed or self-employed in Georgia and receive an income.
The initiators of the proposal noted that the new system will not replace the current pensions, which will remain if the proposal is enacted into law.
The Ministry of Economy promised on 31 October that Georgian Citizens involved in the system will have both savings along with the current state pension after retirement, Liberali reports.
The current state pension amounts to ₾180 ($68) per month, according to the 2016 state budget. The retirement age is 65 for men and 60 for women.
The proposal could be sent to parliament by the end of the year and could come into force as early as the third quarter of 2018.