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ISET Economist Blog

A blog about economics in the South Caucasus.
Dec
11

Do You Have Questions About the Upcoming Pension Reform? Here Are Some Answers

Over the past months, we have been asked several times questions about the upcoming pension reform. Here are some answers. For whom is the contribution to the fund mandatory? Who can join/contribute to the fund? All those individuals who receive their salary net of taxes because their employer pays the income tax for them are automatically enrolled in the fund. Those who are 40 or more years of age will have – after 3 months in the fund – the possibility to opt out. However, this “window” to opt out will close after the 5th month in the fund. Those who a...
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Sep
05

Georgian Pension Reform – an Experiment in Libertarian Paternalism?

Starting from October 1, 2017, a private retirement savings system will be launched in Georgia as part of a broader pension reform. This reform has been discussed by Nino Doghonadze and Yaroslava Babych in Decent Income in Old Age: Georgian Dream or Reality? on the ISET Economist. Today we will focus only on one very interesting aspect of the reform – the “opt-out” principle and its implementation in the Georgian realities. WHAT’S IN THE “OPT-OUT”? The proposed private retirement savings system is based on the “opt-out” principle, according to which...
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Jun
20

MINDSPACE: a New Way to Influence Behavior through Public Policy

WHEN SUCCESS SPEAKS TOO LOUDLY In November 2015, the National Audit Office of the UK has published a report saying: “The Department for Work and Pensions has successfully introduced automatic enrolment to workplace pensions for large and medium-sized employers.” The National Audit Office found that 58,000 employers have enrolled 5.4 million workers between October 2012 and August 2015. The huge increase in enrolment was due to a small policy change introduced by the UK government in October 2012. The Government switched the default option from one i...
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Dec
20

Looking Over the Border: The Pension Reform in Armenia

On the first of January, Armenia will adopt an entirely new pension system. This radical reform addresses two problems: widespread poverty among the elderly and a lack of capital in the economy. The very same problems also exist in Georgia, where the standard governmental pension currently is 150 lari, and where the economy is suffering from high capital costs due to notoriously low saving rates. So, it is worthwhile to have a look at what is going on in our neighboring country Armenia. Georgian decision makers may learn important lessons from their expe...
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