Revolution in the pension system of Azerbaijan: private funds guarding the future

Revolution in the pension system of Azerbaijan: private funds guarding the future
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Economy 7

Azerbaijan discusses creation of private pension funds

As BAKU.WS reports with reference to Xəzər Xəbər, in recent months, the issue of creating private pension funds, which could radically change the approach to pension provision for citizens, has been actively discussed in the country. The introduction of the new system will allow residents of Azerbaijan to independently form their future pensions, creating additional financial protection for old age.

Member of Milli Majlis and member of the parliamentary committee on economic policy, industry and entrepreneurship Vugar Bayramov noted that private pension funds open new opportunities for citizens in the field of long-term savings.

"The main advantage of the system is that upon reaching retirement age, a person will be able to receive payments from two sources simultaneously - state and private pension funds. The contract will clearly specify the payment conditions and the procedure for using the accumulated capital. For example, if a citizen accumulates 60,000 manats, they can use part of this amount, say 20,000, even before reaching 65 years of age," the deputy explained.

According to Bayramov, this approach is consistent with international practice. The Azerbaijani model also plans to provide for the possibility of partial early use of savings in emergency cases or for important life needs. The amount of contributions to a private pension fund will be determined by the contract and the financial capabilities of the citizen.

"The more a person invests in their pension capital, the higher their retirement income will be," he emphasized.

Another important feature of the system will be the ability to make contributions on behalf of relatives - for example, children will be able to form pension savings for their parents.

Providing an example, Vugar Bayramov noted: "If a citizen with a salary of 1,000 manats transfers 100 manats monthly to a private pension fund, then 1,200 manats are formed per year. Over 30 years of such payments, the amount will reach 36,000 manats. These funds can be partially used before retirement or kept entirely to increase future payments."

According to the deputy, the system will also be available to non-working citizens who will be able to make voluntary contributions. In connection with the creation of a new financial institution, changes to the legislation of Azerbaijan are planned, and the launch of private pension funds is expected next year.

This news edited with AI

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