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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.

 

Vastly experienced market-leading firm assisting international and regional clients with all manner of corporate and commercial matters. Particularly well versed in project financing and loan agreements. Clients say: "The lawyers are detail-oriented and are always very helpful... Among the leading firms in Georgia."

Chambers Europe - 2016

Zaza Bibilashvili is a well-known and highly regarded figure in the Georgian legal market. One of the founding partners of the firm, he oversees projects and is a key contact for clients. Lasha Gogiberidze has been called "one of the leading lawyers in Georgia" and "a central person not just in capital markets, but in the legal market in general." Considered an expert in capital markets and project finance work, particularly in the energy sphere, he is highly respected by his peers, who say: "He`s among the top lawyers who shaped the legal market."

Chambers Global - 2016

Solid team with vast experience of handling a wide spectrum of corporate and commercial as well as financial matters. Particularly well versed in project finance and boasts an impressive track record in some of the country's biggest energy and infrastructure projects. Popular choice for prominent international and local clients, including financial institutions and corporates from an array of industry sectors. Clients are impressed with the team's approach, saying: "The best thing is their coming up with proactive advice and suggesting a structure. They are able to work under pressure and respond immediately." Another client adds: "As soon as we give them a project we don't need to double-check anything." Other typical comments are: "They are a top-tier firm on the market with highly skilled, efficient and solution-oriented lawyers."

Chambers Europe - 2017