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∘ Khatuna Todua ∘
THEANALYSIS OF THE PENSION SYSTEM REFORM IN GEORGIA

Summary

The pension reform, in its essence, is a large-scaled project, which stands out with its high social importance, therefore a significant public and political interest is paid to it

The pension reform, planned in Georgia, supposes the transition to a mixed pension model, which means providing pensions by budgeting funds on the one hand, and by saving schemes, on the other hand.

According to the new system, the amount of pension provision is determined by amount of sum which is collected by person during his labor activity. In addition there will exist the social pension which will be covered by budget and it will be given to any citizen, regardless of his incomes, work experience etc.

The social pension will be based on living minimum and it will satisfy the primitive needs of pensioners.

Such a mixed model is regarded as optimal as it has more ability to diversify risks and also to respond to the modern economic and demographic challenges.

Any reform, as a rule, faces some risks and challenges, especially in the terms of modern unsteady macroeconomic environment. So, it is necessary to properly analyze all important aspects of the reform, in particular, it should be noted, that the reform would have an acute impact on the financial capacities of country, so, the proper management of the process by the government is a matter of high importance.

Besides the high financial expenses, another problem is the undeveloped securities markets in Georgia, and then there is a problem about the proper and fair management of pension assets by managing companies. The National Bank of Georgia would be responsible for the promotion of effective regulations in this field.

It should also be taken in view, that most of the private investment companies would face an absence of trust among population towards their activities. The low level of self-discipline among the Georgian population would also be treated as a serious delay to the implementation of the reform.

Nevertheless, despite all the threatening of above mentioned difficulties the promotion of the pension reform in Georgia is the matter of the urgent need.

It's strongly recommended to start the first term of the reform immediately, by undertaking more intensive efforts in the field of an existing pension system's analyzes and also by developing proper reform program.

Ivane Javakhishvili Tbilisi State University Paata Gugushvili Institute of Economics International Scientific C O N F E R E N C E S "ECONOMY – XXI CENTURY"

E ISSN 2587 - 4691	∘ Khatuna Todua ∘ THEANALYSIS OF THE PENSION SYSTEM REFORM IN GEORGIA Summary The pension reform, in its essence, is a large-scaled project, which stands out with its high social importance, therefore a significant public and political interest is paid to it The pension reform, planned in Georgia, supposes the transition to a mixed pension model, which means providing pensions by budgeting funds on the one hand, and by saving schemes, on the other hand. According to the new system, the amount of pension provision is determined by amount of sum which is collected by person during his labor activity. In addition there will exist the social pension which will be covered by budget and it will be given to any citizen, regardless of his incomes, work experience etc. The social pension will be based on living minimum and it will satisfy the primitive needs of pensioners. Such a mixed model is regarded as optimal as it has more ability to diversify risks and also to respond to the modern economic and demographic challenges. Any reform, as a rule, faces some risks and challenges, especially in the terms of modern unsteady macroeconomic environment. So, it is necessary to properly analyze all important aspects of the reform, in particular, it should be noted, that the reform would have an acute impact on the financial capacities of country, so, the proper management of the process by the government is a matter of high importance. Besides the high financial expenses, another problem is the undeveloped securities markets in Georgia, and then there is a problem about the proper and fair management of pension assets by managing companies. The National Bank of Georgia would be responsible for the promotion of effective regulations in this field. It should also be taken in view, that most of the private investment companies would face an absence of trust among population towards their activities. The low level of self-discipline among the Georgian population would also be treated as a serious delay to the implementation of the reform. Nevertheless, despite all the threatening of above mentioned difficulties the promotion of the pension reform in Georgia is the matter of the urgent need. It's strongly recommended to start the first term of the reform immediately, by undertaking more intensive efforts in the field of an existing pension system's analyzes and also by developing proper reform program.