Georgia’s Pension Evolution: From Mandatory Participation to Tailored Investment Strategies

The Georgian pension scheme mandates the participation of all permanent residents who, as of August 6, 2018, have attained the age of 60 for men and 55 for women. While obligatory for this demographic, the pension scheme extends the option for elderly individuals to voluntarily join. In cases of voluntary engagement, it becomes imperative for the employee to inform all employers, ensuring accurate taxation processes.

Pension Accumulation Mechanism

Pension accumulation formula works as follows: 2% of the gross income is withheld from the net payable income of the person. Same 2% is paid by the employer. Another 2% is paid by the State unless the gross income for the calendar year of the persons reaches 24,000GEL, then the State portion reduces to 1% and as soon as the accumulate gross income reaches 60,000 GEL, the State stops its contributions. The same calculation starts over from the beginning of the following calendar year.

In accordance with the current legislation, after reaching the retirement age, the pension will be issued monthly. The monthly pension amount will be calculated based on the average life expectancy. If a person requests their pension before reaching the eligible age, the accumulated pension will be passed on to their successors.

Investment Opportunities and Supervision

One of the advantages of this pension scheme is that it not only allows to accumulate funds but also to accrue more interest on your investments. Assets accumulated in the pension fund can be invested only by complying with the requirements of the law and investing in sound financial instruments, which is supervised by The National Bank of Georgia.

Investing of assets abroad, mainly means investing in international equity securities, that is, investing in shares, which includes investing in leading companies in both developed and developing countries. Since the investments made by the Pension Agency are diversified geographically and sectorally, the return on these assets does not depend on the results of any particular company or country.

Changes in Investment Portfolios

Until August 2023 all the savings of the citizens included in the pension scheme were completely distributed in a less risky investment portfolio. A low-risk investment portfolio is characterized by stable profitability, as investments are mostly made in interest-bearing instruments, and the share of investments in foreign currencies and global shares is limited to 20% of the portfolio. From August 6, in addition to the stable (less risky) portfolio, there is an opportunity to invest in high-risk portfolios, and the citizens involved in the scheme will be able to make this choice themselves.

Default Portfolio Allocation

Starting on August 6, 2023, participants in the pension scheme had a one-month window to select the portfolio for their pension savings. Individuals who did not make a specific portfolio choice within this timeframe were automatically assigned to portfolios tailored to their age category. Within the pension scheme framework, the distribution of pension assets is guided by the participant’s age, ensuring a customized investment approach. Specifically:

  • Participants aged below 40 were granted to have their pension assets distributed into the growing (high-risk) investment portfolio
  • Participants falling between the ages of 40 and 50 could see their pension assets allocated to a mixed (medium-risk) investment portfolio
  • Participants aged 50 or above were granted to have their pension assets assigned to a stable (less risky) investment portfolio.

The Crux of the New Regulation

However, starting from January 3, 2024, the newly implemented regulation stipulates that the individuals who have not selected regarding their portfolio type will be reverted to the less risky investment portfolio until January 1, 2028.

 In summary, the Georgian pension scheme obligates eligible residents to participate, while also extending voluntary inclusion for the elderly. Post-retirement, monthly pensions are calculated based on life expectancy, with an option for early distribution to successors. The scheme offers supervised investment opportunities, promoting diversification. Introduced in August 2023, changes allow participants to choose high-risk portfolios or default allocations based on age. A crucial point is the new regulation from January 3, 2024, automatically shifting non-selecting individuals to a less risky portfolio until January 1, 2028, emphasizing the need for proactive decision-making.

For further information and guidance please contact Eurofast office in Georgia, Tbilisi at

Irina Lopatina
Country Manager
Eurofast Tbilisi