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How does the funded pension work in Georgia and who pays the contributions?

Contributions, participants and payout.

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Short answer

Georgia's funded pension consists of 2% of salary each from employee and employer, plus a state top-up of up to 2%, paid into an individual account. Participation is mandatory for employees, while self-employed people join voluntarily and contribute 4% of income, with the state adding its share. Savings are paid out from retirement age as a lump sum or in programmed withdrawals.

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Why

  1. Law on Funded Pensions, Article 3(6): the employer pays 2% at its own expense, the employee pays 2% at their own expense, and a self-employed person pays 4% of income.
  2. Article 3(6): the state adds 2% on the first GEL 24,000 of annual income and 1% on the part from GEL 24,000 to GEL 60,000, and nothing above GEL 60,000.
  3. Article 32(1): after reaching retirement age the participant receives the savings as a lump sum or in programmed withdrawals. The age is set by the Law on State Pensions (Article 5): 65, and 60 for women.

Details

The state contribution is paid after the Pension Agency confirms the participant's own contribution (Article 3(6)). Participation is mandatory for employees and voluntary for the self-employed (Article 3(2) and (3)). Besides citizens of Georgia, foreigners with a permanent residence permit are covered (Article 1(4)). If contributions stop, for example after dismissal, the savings stay in the individual account (Article 23). For more on pension payments see the answer on salaries and pensions and the article on pensions for foreigners in Georgia.

Tip

Check on your payslip that the contributions are withheld and transferred: the employer pays them into the system, and the state top-up is credited only after the contribution is confirmed.

What may differ

Special participation rules apply to people who reached a certain age before the law took effect and to the self-employed. Rates and thresholds change by amendment, so check the current version of the law.

Common misconception

Only the employee pays into the funded pension, out of their own salary.

What actually happens

Under Article 3(6) of the law, three parties contribute: the employee 2%, the employer 2% and the state up to 2%.

People also ask

  • How does the pension scheme work in Georgia?
  • Who contributes to the funded pension in Georgia?

Sources

This answer is for reference only and is not legal advice. Rules change, so check official websites.

Pension in Georgia for foreigners
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