Azerbaijan to Create Legislative Base in Private Pension Funds
OREANDA-NEWS. October 13, 2010. Azerbaijan returns to refused before idea of passing the Law on Private Pension Funds.
On October 13, chairman of the State Social Protection Fund (SSPF) Salim Muslimov said, resolving this issue is included in draft budget of the fund for 2009-2015.
“Licenses for establishment of private pension funds will given in compliance with a decree of Azerbaijan President by the Azerbaijani Ministry of Finance the state will be responsible for the population’s pension contributions finally in case of emerging force majeure, in particular, during bankruptcy of the fund,” S. Muslimov said.
According to him, retirement insurance system, created in Azerbaijan, is an analogue of pension system of Germany. It is a three-step system first step of which envisages payment of pension contributions on the principle of solidarity by all working citizens of the country. The second step of system includes payments of compulsory state social insurance part of which is deposited in banks, as well as in securities for the purpose of reception of real profit and at the expense of it growth of pension amounts. The third step stipulates gathering of voluntary contributions in private pension funds and delivery of additional pensions to pensioners.
“This system is applied successfully in Germany and other countries of Europe, however, its second and third steps are undergone some risks. As a result of economic crisis, losses of the third step of the system made 40%. The fact of lack of this step in pension system of Azerbaijan has influenced positively on activity of pension fund which could avoid serious losses. However, anyhow this system has more pluses, in particular, possibility to receive pension from three sources, it means, in larger volume,” S. Muslimov said.
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