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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.
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