Azerbaijan raises pensions following presidential decree (UPDATE)

Economy Materials 11 February 2023 10:30 (UTC +04:00)

Details added (first version posted at 19:54 on Feb. 10)

BAKU, Azerbaijan, February 10. President Ilham Aliyev's Decree on the pension indexation of February 10, 2023 is a continuation of sequential steps to strengthen social protection of pensioners and another support aimed at ensuring their welfare, the Ministry of Labor and Social Protection of the Population told Trend.

According to the decree, based on the State Statistical Committee's data, pensions granted before January 1, 2023 have been increased by 14.7 percent indexation, following the annual growth rate of the average monthly nominal wage for 2022.

The January increase will be paid along with the February pension. For instance, the pension worth 400 manat ($235.3) has been increased by 14.7 percent or 58.8 manat ($34.56) since January 1, 2023, thus totaling 458.8 manat ($269.66). Therefore, the January increase worth 58.8 manat ($34.56) will be added to the February pension.

In total, the government will spend additional 728 million manat ($427.88 million) on new increases, covering a total of 1.1 million pensioners.

The transition to a single indexation method under the new law allowed for an annual pension increase based on indexation to all types of pensions. In the following years, all types of pensions will continue to increase via the indexation method. Thus, the current increase will be applied both to pensioners who have fixed pensions under the general conditions, and to those who receive a seniority bonus (retired military personnel, law enforcement officers, etc.). Financial aid paid to pensioners from the beginning of 2023 is included in their pensions.

The pension amount, having increased after the inclusion of material assistance, this time increases by indexation. For example, a serviceman's pension worth 800 manat ($470.49) per month in 2022 together with material assistance comprising 10 percent of it (80 manat or $47.04) is now increasing by 14.7 percent (129.36 manat or $76.07) to 1,009 manat ($593.4).

According to the annual level of the consumer price index for 2022, the amount of pension capital registered before January 1, 2023 in the insurance part of the personal account of policyholders also increases by 13.9 percent following indexation.

This suggests that the pension capital on individual personal accounts of those working under an employment contract not only increases monthly due to social insurance contributions from their wages, but also based on indexation carried out at the beginning of each year. The increase in pensions through indexation will be applied automatically through an e-system.