2009 Pension budget

Politics Materials 26 November 2008 10:05 (UTC +04:00)

The Azerbaijani Parliament approved deficit-free budget of the State Fund for Social Protection (SFSP) at the plenary session on 25 November. The importance of this budget, which closely reflects the interests of simple citizens, in no way makes it possible to indifferently react to its content.

According to the project of budget of SFSP, in 2009 incomes and expenditures of the SFSP will amount to AZN 1.7bln, which is by 26.3% more than the figure in 2008.

It should be noted that decrease is observed in the growth rates in the 2009 budget of SFSP as compared to the previous years. For example, in 2008 as compared to 2007, the budget increased by 42%, in 2007 as compared to 2006 - 56.1%. This is connected with the fact that the basic work on the project of pension reforms completes, in particular 90% of measures to provide plastic cards to the pensioners were completed.

Traditionally the key share of incomes (71.9%) of budget of SFSP will be formed at the expense of transfers on obligatory social insurance - AZN 1278.05mln (an increase of 25.4%). AZN 542.73mln or 42.5% of transfers due to the payments on required state social insurance fall on the budgetary sector. Of them, AZN 460mln is formed due to the enterprises, financed from the budget, AZN 62.72mln - due to the workers of enterprises, financed from the public budget, AZN 20mln due to the subsidies from the public budget or transfers from the non-budgetary funds of budgetary organizations.

In 2009 incomes from private sector through obligatory social insurance will make up AZN 735.32mln or 57.5% of the total amount of insurance payments. Particularly, AZN 22.30mln will enter the Fund from the individuals, engaging in entrepreneurship. Rise of incomes from this line is connected with many factors, including forecasts for rise in number of people, who are on the books of social insurance in 2009, where foreign employees will play an important role, as well. According to forecasts of the Fund, the number of labor pensioners will make up 1.29mln people in 2009.

As known, still there are problems with the involvement of legal and physical entities and also foreign workers in the social insurance. The measures, taken for the legalization of wages, did not give proper effect. Deviation from the payment on the required social insurance by individual entrepreneurs, who act in the spheres of trade, transport, construction, is observed.

However, due to the introduction of the principle "single window", since the beginning of this year, as of 1 July, the number of payers of required social insurance increased by 135,000 people. This gives hopes for the expansion of the sphere of influence of personal account. As of 1 October 2008, in Azerbaijan the number of labor pensioners composes 1.26mln people.

Other significant article of the incomes of SFSP budget in 2009 will be transfers from the Public budget in amount of AZN 495mln (an increase of 28.6%).

According to the forecasts of the Fund, if over the next seven-nine years the possibility is created to introduce the system of the accumulated part of the pension, then the transfers from the Public budget to the budget of SFSP will be lowered to the minimum amounts.

Other incomes of the Fund will in 2009 compose AZN 2.5mln, including AZN 1.8mln from cost of sanatorium, which is 20% more than the index of this year.

Thus, the growth of incomes of the budget of the Fund should justify the growth of expenditure directed towards payment of labor pensions. Thus, in 2009 it is planned to direct AZN 1.7bln of expenditures (96.2%) of the Fund to people's payments, including AZN 1.66bln -pension payments.

In particular, AZN 1210mln will be directed towards the payment of the base part of the labor pensions, which is 24.4% higher than 2008; AZN 450mln (an increase of 31%) - payments on insurance part of the pensions. After the increase in the base part of the labor pension from AZN 60 to AZN 75 from 1 September 2008, the amount of monthly funds necessary for financing the pensions composes AZN 120mln, which is 46%, or AZN 38mln exceeds the index in the beginning of year. In 2008 the base part of the pensions with respect to the age grew by 50%, its insurance part - 16.7%. In 2009 the average monthly level of labor pensions in Azerbaijan can be increased to AZN 107-108.

AZN 47.5mln will be directed towards the payment of allowances due to the social insurance next year, which is 26% higher than 2008. Of this amount, AZN 15.02mln will be directed towards the allowances for the temporary loss of labor ability; AZN 15.87mln - maternity allowance; AZN 1.39mln - birth of child; AZN 5mln - allowance for the care of the child of up to three years of age; AZN 9.2mln - allowances for burials; AZN 0.7mln - allowances for the persons with the status of refugees; AZN 0.3mln - allowances for the persons, who received mutilations in the liquidated kolkhozes and state farms.

The budget of SFSP in 2009 also envisages realizing serious social programs. In particular, next year AZN 3.62mln will be directed towards strengthening the social protection of invalids. The Fund intends to spend AZN 10.16mln on the measures for the employment, in particular AZN 3.6mln will be spent on the benefits for unemployment.

Instead, the Fund's expenditures, connected to paying pensions and rendering banking service of this process, was reduced by AZN 1.3mln -to AZN 19.9mln.

It is planned to spend AZN 20.41mln on the local organs of the SFSP in 2009. Part of this finance will be directed towards constructing administrative buildings of SFSP in the regions and repair of its old buildings.

Next year it is also planned to complete works on the establishment of information and technical base for the individual accounts (organization and conducting account of the information on each insured person to ensure pension and other rights of social protection). The Fund envisages to spend AZN 1.65mln in this regard. Today SFSP registered 1.45mln people in the system of the individual account of payers on required state social insurance.

SFSP will provide AZN 110,000 for Migration Department. The Fund will increase expenditures by AZN 200,000 - to AZN 12.1mln for sanitaria and health resorts and measures to provide insured people's health. These funds will be directed to increase salaries of different employees of the Azerbaijani Trade Union Confederation by 25% in future and to pay them premiums, which will require AZN 197,500. The Fund allocated AZN 40,000 to pay membership fees to the international organizations.

It should be noted that starting from 2009, pilot required medical insurance (RMS) will begin to be introduced in Azerbaijan. And the State Fund for Social Protection is prepared to assume the formation and control of the RMS. In the entire world, a practice has been accepted, when the Pension Funds collect payments on the required social insurance, one of the components of which is the required medical insurance. As seen, SFSP's 2009 budget does not have vital differences from the budget of 2007, except an increase in the income and expenditure sections.