Azerbaijan launches new mechanism to calculate pensions
Azerbaijan, Baku, Jan. 6 / Trend U.Ismayilova /
Azerbaijan has launched new mechanism for calculating labor pension in accordance with duration of work experience, the State Social Protection Fund (SSPF) reported
"Transition to a new system of calculating pensions in Azerbaijan based on duration of work experience, will enable the minimum labor pension in the country not be below 90 manat," SSPF Chairman Salim Muslimov
"The new calculation system is referred to persons who retired from Jan.1, 2006," Muslimov said
The Social Fund established the retirement age for 167,891 persons from 1 January 2006 to 1 October 2009. Of these, 60.4 percent or 101,270 people receive minimum pension worth 75 manat, representing 39 percent of all retirees, and only four percent receive pension more than 300 manat (20 percent retirees), and 680 people - over 1,000 manat.
This situation is unfair because some people, receiving an illegal certificate on high salary over the last two years of working experience, receive higher pension, but those who have worked for 40 years receive base pension of 75 manat
Introducing a new system of calculating pensions will ensure full transparency, Muslimov said.
Under the new system of pension calculation, 170 manat will be accounted each year over the past four years for every citizen, considering the inflation in 2006 (8.3 percent), in 2007 (16.7 percent), 2008 (20.8 percent) and in 2009.
Then, this amount will be added to the amount at the individual account collected over four years, and the amount of the insurance part of pension will be determined by dividing the sum into 144 months, and the basic pension in the country will be added to this sum. This system will allow a minimum amount of pensions to increase to 90 manat
The new system will lead to additional expenses in the amount of 10 million manat. If the retirement age has not been extended for six months next year, the costs would have amounted to 20 million manat, Muslimov said
According to amendments to the law on labor pension, dated October 2009, retirement age is extended.
According to amendments to Article 7, the age limit for men will rise by six months each year from 1 January 2010 to 1 January 2012, women - from 1 January 2010 to 1 January 2016, and be determined at around 63 and 60 years respectively