Challenges of the Non-Contributory Pension System in Georgia
Tuesday, 30 January, 2018

Dr. Tamila Nutsubidze, a consultant at the Healthcare and Social Issues Committee and the Budget and Finance Committee of the Parliament of Georgia, visited ISET to talk about the challenges of the non-contributory pension system in Georgia.

In the first part of the presentation, Dr. Nutsubidze gave a short overview of social/non-contributory pension schemes. According to existing literature, there are possible connections between social pensions and poverty reduction among old-age populations. Dr. Nutsubidze highlighted that in most middle-income countries, dependence on a non-contributory pension is caused by the expansion of a substantial coverage gap due to a reduction in the number of workers who contribute to pension schemes.

Dr. Nutsubidze then placed particular emphasis on the current situation in Georgia. Published literature suggests that in Georgia, old-age pensions reduced overall poverty due to a significant decline in child poverty in 2013. Moreover, Georgia’s old-age pension is recognized as the most effective social pension among developing countries.

In the recommendation part of the presentation, Dr. Nutsubidze mentioned that the main goal of pension reform in Georgia should be to maintain the sustainability of the basic pension system and its poverty alleviation programs. In addition, appropriate reforms might include an increase in retirement ages and a reduction in the generosity of benefits through means testing, which helps to ensure that basic pension benefits are adequate helps to contain government spending on basic pensions, and potentially improve fiscal sustainability. “In the medium-term perspective, the basic pension program must be complemented by the implementation of improved and effective social assistance and health programs targeting the elderly as well as other vulnerable populations who are in extreme poverty. This might enhance the effectiveness of the basic pension in mitigating poverty in Georgia,” she claimed.

ISET thanks Dr. Nutsubidze for taking the time to visit the institute and explain such an important reform currently being implemented in Georgia.