As stated in the explanatory card of the bill, the current structure, which consists of a supervisory board and an investment board, has failed to provide unified management and comprehensive supervision of the pension scheme. [...] Furthermore, in Georgia, proposed amendments to the funded pension system involve a shift in the appointment process for the Governance Board of the Pension Agency. [...] In the Netherlands, the board of the Algemene Pension Group (APG), one of the largest pension fund administrators, consists of members appointed by the Supervisory Board, which itself is composed of representatives from employers, employees, and independent experts. [...] Therefore, while the intention behind the proposed amendment may be to address inflationary pressures and enhance investment diversification, it is crucial to consider the potential consequences of increased investment freedom within the context of the pension fund's long- term sustainability and the well-being of its participants. [...] In addition to the anti-democratic Law on Transparency of Foreign Influence (known as the Agents Law), several laws and legal ISET POLICY BRIEF SERIES PAGE | 14 amendments such as alterations in the governance of the National Bank of Georgia, the so-called Law on Offshores, and the changed course of strategic partnerships by the intention of involving sanctioned Chinese companies in the major stra.
Authors
- Pages
- 16
- Published in
- Georgia
Table of Contents
- ISET POLICY BRIEF SERIES PAGE 1 1
- ISET POLICY BRIEF SERIES PAGE 2 2
- EXECUTIVE SUMMARY 2
- ISET POLICY BRIEF SERIES PAGE 3 3
- The proposed legal regulatory changes to the pension system bear the risk of adversely affecting future welfare of pension funds 1.5 million participants 3
- INTRODUCTION 3
- ISET POLICY BRIEF SERIES PAGE 4 4
- Figure 1. 4
- The first pillar is the state pension providing a basic flat-rate pension to all eligible individuals. 4
- The second pillar is a mandatory funded pension system. 4
- ISET POLICY BRIEF SERIES PAGE 5 5
- Figure 2. 5
- Figure 3. 5
- ISET POLICY BRIEF SERIES PAGE 6 6
- Figure 4. 6
- The third pillar allows individuals to voluntarily contribute additional funds to their pension savings through private pension funds or insurance companies. 6
- ISET POLICY BRIEF SERIES PAGE 7 7
- CENTRALIZING GOVERNANCE IN GEORGIAS PENSION REFORM 7
- This change has raised concerns about reduced independence and transparency in the selection process potentially endangering the recruitment of competent and impartial candidates. 7
- ISET POLICY BRIEF SERIES PAGE 8 8
- Successful examples from other countries highlight the importance of diverse and balanced board member selection processes. 8
- ISET POLICY BRIEF SERIES PAGE 9 9
- LIMITING EXTERNAL ASSET MANAGEMENT IN PENSION FUNDS 9
- ISET POLICY BRIEF SERIES PAGE 10 10
- 1. High Administrative Costs 10
- Chile One of the significant issues with the Chilean pension system managed by 10
- United States 401k Plans In the U.S. individual retirement accounts like 10
- 401k plans often incur higher administrative and management fees compared to defined-benefit pension plans. These fees can significantly erode the retirement savings of individuals over time . 10
- 2. Insufficient Payouts 10
- Chile Despite promises of high returns many retirees receive much lower 10
- Poland Similar to Chile Polands experience with privatized pension funds led 10
- 3. Complexity and Lack of Financial Literacy 10
- Chile Choosing between different private pension fund managers requires a 10
- Australia Superannuation Funds Australias superannuation system also 10
- ISET POLICY BRIEF SERIES PAGE 11 11
- Figure 5. Ratio of pension assets to GDP in selected countries in 2022 11
- ISET POLICY BRIEF SERIES PAGE 12 12
- LOOSENED CONSTRAINTS CHANGING PENSION FUND 12
- INVESTMENT BOUNDARIES 12
- ISET POLICY BRIEF SERIES PAGE 13 13
- Figure 6. 13
- ISET POLICY BRIEF SERIES PAGE 14 14
- CONCLUSION 14
- ISET POLICY BRIEF SERIES PAGE 15 15
- ISET POLICY BRIEF SERIES PAGE 16 16
- ISET Policy Institute 16