Azerbaijan State Social Protection Fund Head: Social Insurance Rate Reduction Not Expected until 2009
Azerbaijan State Social Protection Fund does not expect a reduction in the rate on the obligatory social insurance until 2009. According to Salim Muslimov, Chairman of the Fund, since it was necessary to resolve the task set by the President of increasing the minimum amount of the basic part of the labour pension on par with the cost of living which was set to the Fund by the President, the basic part of the pension is expected to be doubled up to September 1, 2008, Trend reports.
The other cause is the self-financing system of social insurance to be formed up to 2015. In this connection, it is proposed to minimize transfers from the State Budget. The transfers will be raised in the next two years (2007 and 2008) in connection with the task of reaching the minimum amount of the labour pension to the cost of living. Then the transfers will be gradually reduced.
It is not necessary to reduce the social allocations rate in this case. However, it would be better to change the social allocations rate to be paid by the employers and employees in accordance with the Pension Concept.
Mr. Muslimov is a supporter of reducing the allocation rate by employers from the fund of payment of labour. He advocates the increase in the allocation rate from the employees` wages. The experience of a number of CIS and other leading West European countries encourages this alternative. For example, in Kazakhstan, where the social insurance rate is 21 per cent, employees pay only 10 % out of their salaries.
At present, the assignation rate on the obligatory social insurance is formed from two sources. The employers from the wages fund carry out allocations to the social insurance at the rate of 22 %, with a deduction of 3 % from the employee's salary.