Pension system of Georgia – reforms and challenges

. In 2018, a mandatory funded pension model was introduced in Georgia and today, Georgian pension system has three pillars. In Georgia, a voluntary funded pension system was established 20 years ago, but received little attention from public and business, one of the reasons of which is lack of stimulating regulations. Pension replacement rate from the first pillar is just under 18% - much lower than in any of the OECD member states. The fact that the amount of pension does not depend on the length of employment, decreases trust in the system. Since 2018, the funded pension system became mandatory for employees under age of 40, for older employees, it is voluntary, but the reform does not apply to today’s pensioners and those who will be retiring in few years’ time, because they will not have enough time to accumulate sufficient amount for adequate pension levels in retirement. If the society will not have trust in all three pillars of the pension system, chances of reversing the last year’s pension reform will rise, due to several reasons: