Azerbaijan to increase pensions for about 36,000 people

27 December 2018 17:14 (UTC+04:00)

By Narmina Mammadova

In 2019, 19,500 people will be granted labor pensions in Azerbaijan, and their income is expected to increase by 48 percent. On the whole, an increase in pensions of approximately 36,000 people is expected next year, the Ministry of Labor and Social Protection said.

The country will automate pensions for 70 percent of those who will receive a pension from the beginning of 2019.

The automated pension assignment will not affect 30 percent of persons, whose personal account has not fixed pension capital from 2006 to July 1, 2018, as well as civil servants, military personnel, persons with special ranks, and other categories. However, in the coming year, work will be done to develop software to automate the pension appointment of citizens of this category.

The pension will be assigned on the day when the right to receive it comes into effect, and one of the contacts of the person existing in the system will receive information on the purpose and amount of the pension via sms, as well as the bank and the date of receipt of the pension card. There is no need for a citizen’s direct appeal, his physical participation in the designation of a pension, or the requirement of any documents.

Also, if until July 1, 2018, pension capital was fixed on the personal account of persons who reached the age of receiving a labor pension in 2019–2020, regardless of the amount, when they receive a labor pension until January 1, 2006 they will be counted 25- summer experience. After indexation of this experience and the above-mentioned pension capital, a pension will be granted on the basis of the formed total pension capital (If the citizens had more than 25 years of experience, then their actual experience will be taken into account).

This rule will only apply until 2021. From this period, when assigning a retirement pension to persons who have reached the legal age, the benefit on the automatic accrual of 25 years of experience will be calculated with a decrease of one year for each calendar year. So, for example, in 2021, the automatically accrued period of insurance experience until 2006 will not be 25 years old, but 24 years, in 2022 - 23 years, in 2023 - 22 years, etc.

In case of assignment to persons of a disability retirement pension, their experience until 2006 will be counted as four months for each year of working age (after 15 years). When appointing a labor pension for the loss of the breadwinner, the experience until January 1, 2006 of a person who died and was not a pensioner will be calculated as four months for each year of working age.

Azerbaijani President Ilham Aliyev on May 2, 2017 approved amendments to the law “On Labor Pensions”.

The amendments provide for the elimination of the concept of the basic part of the labor pension and the 12-year service required for the appointment of a pension, as well as the gradual increase in the retirement age for women and men up to 65 years.

The retirement age will increase every six months until 2021 for men, until 2027 for women. In view of the elimination of the concept of “basic part of the pension”, the law introduces the concept of “minimum pension”. The size of the minimum pension from January 1, 2017 is 110 manats ($64.7).

Another change is connected with the compulsory social insurance. So, now 90 percent of the deductions paid by employee on compulsory state social insurance will be reflected in his/her account.

Deductions are formed from two sources: the deductions made ​​by the employer in the amount of 22 percent of the salary fund of the enterprise, and the deductions worth 3 percent of the employee’s wage. Formerly, only 50 percent of these deductions were reflected in employee’s account.

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