Pension Agency says citizens’ savings “not in danger” following media reports on possible reduction of contributions

Georgian citizens’ savings are “not in danger” and the decline in real returns during the current high inflation is a “temporary, short-term phenomenon” that will not lead to a reduction in citizen contributions, the Georgian Pension Agency said on Tuesday. 

Made in response to recent media reports over the issue, the statement noted the high rate of inflation in the country posed a challenge to savings, and resulted in a reduction in real returns, but highlighted it only impacted accrued real interest payment and not contributions themselves. 

Goga Melikidze, the Chief Investment Officer of the Agency, said on Monday in an interview with local media outlet PalitraNews a further reduction in the body’s profits was possible due to the high inflation rate.

• Net asset value of Georgian pension fund rated at 2.23 bln GEL

One of the main tasks of the Agency's investment activities is to generate positive real interest payments and returns above the minimum inflation rate”, the Agency said in its statement, noting the profitability of its investment portfolio had continued to grow at a time when prices of almost all asset classes globally had “fallen sharply”.

Currency diversification of the Agency’s portfolio, its purchase of global stocks, investments in refinancing rates and in instruments with high, long-term fixed interest rates on the market were also pointed out in the statement. 

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The Consumer Price Index in Georgia in May increased by 1.1 percent month-on-month, while the annual inflation rate equaled 13.3 percent.

As of June 13, the value of total pension assets in Georgia totalled ₾2.39 billion ($813mln/€773mln), with 1,285,000 people registered in the pension scheme.