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Opting Out from the Pension Scheme

As most of you already know, the Georgian Government has adopted a controversial pension law, introducing a mandatory, government-run pension scheme and effectively translating into a 4% tax increase for employees and employers. However, persons who were 40 years of age or older on August 6, 2018 (the date when the law came into effect) have the right to opt-out from the pension scheme. Here is how:

Timeframe for opting-out: is a period of 2 (two) months – no earlier than 3 and no later than 5 months from the date of enrollment in the pension scheme. The “enrollment date” is determined individually for each participant and is the date when the employer closed the first tax declaration after January 1, 2019. The enrollment date for each participant can be determined by accessing the personal account of a participant in the electronic system of the Pension Agency. The username and password for each personal account should have been received by the employers during mandatory registration with the electronic system of the Pension Agency.

How to opt-out from the pension scheme: In order to opt-out from the pension scheme, a participant is required to physically visit (personally or through an authorized representative), the Pension Agency or regional bodies of the Social Service Agency during the respective 2-month period and submit an application. The participant must have his/her ID card (and duly certified power of attorney in case of appearing through a representative). Applications may NOT be submitted electronically. The Pension Agency has only one office, located at 7B Kipshidze Street, Tbilisi. Addresses of the Social Service Agency’s regional bodies are available at www.pensions.ge.

When and how pension contributions will be refunded: Pension contributions should be reimbursed within 60 calendar days following the submission of application by transferring the respective funds to the employer’s account. The employers should then return to the employees contributions made on their behalf within 10 banking days from the date of receipt of such funds.

Please keep in mind that if a person does not opt-out from the pension scheme within prescribed 2-month period, such person will become a permanent member of the pension scheme with no further possibility of opting out.

 

A leading figure in capital markets and M&A, Lasha Gogiberidze has an enviable track record of acting on the market's highlight deals, primarily advising banks, including international developmental institutions. He wins praise for his responsiveness and is described as "very client-focused and understanding of our needs."

 

Chambers Global - 2018

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Legal 500 - 2016