Will the justice set in pension system in Azerbaijan?

The pension reforms in Azerbaijan age almost 10 years. If things go in this way further, the end of them is almost unseen. Indeed, it is necessary to note just for justice, much ahs been changed in this system in the country over this period. For instance, automated pension calculating system has been formed, full and gradual transition to automated system of pension payment has been done, formation of logistics, and software for transition to personal social insurance registration system is nearing to end. Nevertheless, the reforms have not achieved their basic target, which could enable the Azerbaijani pensioner to know the sum of pension when he/she retires and calculate his/her pension pay by itself without infringing a right for fair calculation by a social employee.

One knows, not all Azerbaijani citizens managed to realize in the current components of pensions and any changes in pension legislation, no matter increase of the sum of pension or pension age, remains partly unclear for them and respectively, accepted unambiguously. It is not the guilt of future pensioners, their poor enlightenment. IN fact, they well understand and catch every word uttered by the State Social Protection Fund. This is actually a fault of reformers, who could not come to a common ground for calculating pension.

We remind, even at the beginning of pension reforms several year ago, they said the sum of labor pensions will depend on the duration of work experience and transfers to the SSPF for social security. The period of work experience will also affect the sum of labor pension only because of the duration of payment of insurance fees. However, yet the country applies Soviet system of calculating pension pay based on salary. Numerous co-efficiencies which the social employee use while calculating pensions and is unclear for ordinary people, unfortunately, remain on force.

However, Muslimov promises to apply new mechanism for calculating labor pension in the country. Starting from the next year, Azerbaijan will introduce a new mechanism for calculating pensions - not in terms of salaries for the last five years of work, but according to work experience, which shall be not less than 10 years. Before, major problem was linked with the calculation of the pensions for the period up to 2006.

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. It would be equal to 65 manat, if to add 20 manat in insurance part and basic part of pension (75 manat) the final amount of the pension will reach 160 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

The Fund asserts that despite long üork experinceç 60.8 percent of pendioners receive minimum pension worth 75 manat.

Minimum amount is the basic part of the pension. In accordance with the pension reform in Azerbaijan, labor pension per age which the government pays to pensions currently is based on three parts: basis, insurance and accumulative.

The labor pension consists of two parts in Azerbaijan - base and insurance. The base part of labor pension will be liquidated in Azerbaijan. According to him, the state pension-insurance system development program for 2009-2015 also stated that after a certain time, the collected insurance payments, the legalization of employees' salaries, increase in the number of those registered in individual account system will create conditions to refuse from the Public budget.

Due to it, it will not be necessary to specify the base pension, although it can be preserved to some extent, since it is inevitable," said Muslimov.

Gradually this minimal part should lose its significance, since everyone should know how much social benefits they paid, how much money has accumulated in individual account, as well as the amount of the indexed part.

information on each insured citizen will be placed on the official website of the State Fund, as well as in the end of the year, all insured persons will receive written notification on the accumulated amount in their account.

Thus, the insured will have an opportunity to calculate his/her pension, by dividing the sum into 144, and regularly controlling the process. This system is applied worldwide and placing data about each insured, where the amount of accumulation by 2006 and after will be placed since mid-2010. In particular, the Fund intends to send official letters to all 1.85 million insured by the end of 2010 by indicating an accumulated sum.

As a result, a citizen while reaching the pension age can send his/her data to the SSPF via internet and pension will be calculated immediately after the check-up. Furthermore, pension will be calculated automatically. At the same time, everyone can receive a sum calculated in the account by injecting code of his/her social insurance card.

The new rules also have other priorities:

- The current method of calculation takes a maximal amount of average monthly salary recorded by 01.01.2006 (2004-2005), which is referred to all period of activities (though by 2004-2005 the average monthly salary was rather low).

- Though social insurance is applied since 1992, insurance capital is calculated for entire period of experience.

- New methods are applied for those who will, retire after 01.01.2010, which means increase of newly appointed pension rate.

These steps are probable to lead to rehabilitation of social justice, cease disagreement among different social groups and increase pension rate in Azerbaijan. Changes to the law on Labor Pensions, made late last year, are directed at preventing incorrect calculation of pensions, which will ensure transparency in the system in whole.