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Rights Group Challenges New Pension Savings Scheme in Constitutional Court

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The Georgian Democracy Initiative (GDI), a Tbilisi-based rights group, has filed a lawsuit in the Constitutional Court of Georgia seeking to annul mandatory enrollment in the newly-introduced pension savings scheme, which entered into force on January 1, 2019.

The organization claims the Law on Accumulative Pension contradicts to articles 11 (right to equality) and 19 (right to property) of the Constitution of Georgia. The rights group requests suspension of its application pending final decision of the Constitutional Court.

“GDI believes that mandatory enrollment in the new pension scheme and mandatory contributions in the pension fund, restricts property rights of employees, and amounts to seizure of employers’ property,” the organization said in its statement on January 8.

“Budgetary contributions to the pension fund is not based on the principle of equality and causes discrimination on the ground of one’s property,” the statement also reads.

According to Eduard Marikashvili, GDI’s lawyer, mandatory enrollment in the pension scheme is unconstitutional. He believes all employees should have the right to opt out from it.

The Law on Accumulative Pension, which was adopted in July 2018, automatically enrolls all employees (men under 60 and women under 55) into the new retirement savings system (individuals above 40 are entitled to leave the pension scheme until May, 2019.)

Those enrolled in the savings scheme have to pay 2% of their gross salary per month. Up to 2% of gross salary will be funded from the state budget (budgetary contributions vary according to the salary range), and another 2% will be financed by employers.

The accumulated sum will be gradually returned after retirement. It will be complemented by basic pension allowance, which currently stands at GEL 200 (USD 75).

This post is also available in: ქართული (Georgian) Русский (Russian)

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