Georgia’s Pension Agency to invest savings in shares of major corporations

Georgia’s Pension Agency will invest savings from the pension system in shares of major international companies including Apple, Google and Toyota, Chief Investment Officer Goga Melikidze revealed on Friday.

The representative of the state body said the cumulative pension scheme would be used to allocate funds to an investment portfolio, adding the “high-risk” investments would also be used for shares of the likes of Louis Vuitton, Nestle and Samsung.

As part of the new phase of the scheme, individuals will have the choice to invest in three distinct portfolios, each varying in terms of risk and potential returns - to be categorised as low-risk, medium-risk and high-risk portfolios.

Participants will be able to choose their preferred portfolio between August 6-September 6 annually, with savings automatically transferred to the high-risk portfolio for the next 12 months in case no selection is made.

Melikidze claimed that pension savings were managed by a “qualified and independent” investment council supervised by the National Bank of Georgia, adding “one of the main goals” of the Agency was to ensure ”effective management, protection and investment of pension savings according to the best interests of the participants”.

The Pension Agency has offered participants allocation of pension assets based on the international standard, in order to maximise their savings, and, at the same time, given them free choice in the selection of investment portfolios”, he said.

Pension scheme participants already have the opportunity to direct their own savings into investment portfolios from which they will benefit even more, and the Pension Agency will continue to support them in doing so”, Melikidze added.

Nikoloz Gagua, the Vice President of the National Bank, said pension assets would increase and added there was “no risk” of participants losing their savings.

All international practice, and our five-year experience, allows us to assume that pension assets will increase, [and that] there is no risk that participants will not be able to take the contribution. Risk-taking is to protect an individual approaching retirement age so that the value of their assets does not decrease during retirement. This risk is protected by a low-risk portfolio”, he said.

The cumulative pension scheme came into effect in Georgia in January 2019 and applies to Georgian citizens, foreign nationals living in Georgia with a permanent residency in the country, and stateless persons who are employed or self-employed and receive an income. 

It also applies to employees of both the public and private sectors.