In 2013, Azerbaijan and the European Union signed agreements for a twinning project, funded by the EU, which seeks to establish a funded non-state second pillar. Azerbaijan manages assets of over €27bn in its State Oil Fund.
The Caucasus nation aims to develop a funded element within the national pension system and promote a market for private pensions through the creation of a legal framework for non-state pension funds.
Latvia and Germany have been twinned with the country, which has a population of 9.7m, to “enhance capacity of the State Social Protection Fund of Azerbaijan (SSPF) to establish the regulatory, legal and administrative framework for the introduction of a funded element in the insurance-pension system and the establishment of non-state pension”, according to a 2014 mission statement.
Over a period of 18 months, starting in July 2014, experts from both countries will work together with Azeri officials to draft legislation for the new system, establish a mechanism for asset accumulation and fund management in individual accounts, and to raise public awareness through a communications policy.
Today, Azerbaijan’s pension system consists of a pillar with two components: One is a fixed amount every citizen receives independent of wage and dependent on contribution period; the other is an insurance component based on a notional defined contribution system.
The money is managed by the SSPF. It recently hosted a team from Latvia’s Ministry of Welfare to work on scenario calculations for a funded pension component in the state social insurance system. A specialist from the German Statutory Pension Insurance Scheme (Deutsche Rentenversicherung Bund) has been seconded to work alongside the Latvian delegation.
Pensions In Central & Eastern Europe: A fresh start for pensions
- Currently reading
Pensions In Central & Eastern Europe: Azerbaijan seeks Latvian and German expertise