Azerbaijan Launches Introduction of Pension Storage System

Business Materials 25 February 2008 13:46 (UTC +04:00)
Azerbaijan Launches Introduction of Pension Storage System

Azerbaijan, Baku, 25 February / Trend corr U. Ismayilova / The Social Protection Fund of Azerbaijan launched implementation of the 3rd stage of reforms in the country's pension system with the technical support of the US Trade and Development Agency (USTDA), the head of the fund Salim Muslumov said on 25 February.

"The third stage of reforms envisages complete introduction of the pension storage system," he said.

On 25 February, the Fund and USTDA signed an agreement envisaging the allocation of a grant for the pension system reforming project in the sum of $600,000. The total cost of the project is $1.111mln.

The third stage of reforms will continue the World Bank's project on the improvement of the pension system in Azerbaijan (1st and 2nd stages of the pension reforms), which was planned to be completed in 2008, but was extended.

According to Muslumov, in the near future the fund will announce a tender to select a consultant on the development and introduction of the storage system.

"The project also envisages turning the fund into a commercial organization," he said. According to the project, the saved funds (payments from the population) will be put into bank deposit accounts or in other organizations to gain profit, which will then be transferred back to the pensioner's account.

It has not been yet defined where the funds will be put and which model will be applied. This will be determined after design of the model is complete. "The profits should be no less than consumer prices in the country," Muslumov said.

The pension storage model will promote development of the internal financial market, and a bill will be developed in connection to this. The model will be designed and submitted to the Government by the end of the year, he said.

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