Expanded Summary

The goal of the research is to assess the level of public awareness regarding the pension system and cumulative pension schemes, identify and assess real risks, and evaluate the development of pension schemes and funds in Georgia. Five main problems and risks have been identified related to the development of pension schemes and funds in Georgia:

1. Lack of sufficient Legal framework;

2. Foreign investment and pension fund deficits;

3. Lack of financial instruments and regulations in the Georgian Capital Market;

4. Negative history and experience from the 90s;

5. Low level of public awareness about the pension system.

The literature and materials used in the study represent the analysis and comparison of the Georgian pension reform and systems to the best foreign practices. The comparison included studying materials such as legal frameworks, instructions, policies, processes, and procedures. One of the main focuses of the study was on the Pension Agency of Georgia, which is a legal entity of public law responsible for the administration of the cumulative pension scheme and investment of pension assets in accordance with regulations.

The primary focus of the research was to conduct a population survey to determine the underlying reasons for the prevalent pessimism among the Georgian citizens towards the pension system. To achieve this objective, an exploratory study was conducted. The results of this study were used to assess the validity of the pessimistic approach taken by the population towards pension reform and to identify the key obstacles hindering the development of pension funds. The final phase of the research involved analyzing the role and responsibility of the government in this field.

To sum up the research, we can conclude that the majority of the public is not properly informed about the pension system and the reform in Georgia. Consequently, in the conditions of low level of awareness, mistrust towards the pension reform and the pension system is unjustified. The real benefit from the pension reform will be tangible after 25-35 years, when the population involved in the scheme will feel its real value.

In order to solve the identified problems, it is necessary to take into account the following recommendations, both for the Pension Agency, as well as for the Government and for the participants of the cumulative pension scheme:

Recommendation N1: The Government should provide positive, objective information and knowledge about the pension reform and the pension scheme to young people in the educational institutions. These can be both foreign successful examples and current achievements of the Pension Agency. Youth should understand the basic principles of the country's pension system and its benefits. At the same time, the Government should develop the legal framework to create better legal environment for the international corporations involved in the pension industry.

Recommendation N2: The State Pension Agency should advertise successful pension appointments and issuances and position itself as a stable and important financial institution contributing to the reconstruction of the country's economy. The Agency should promote scientific research related to the development of the field and organize international conferences and workshops. Additionally, it is important to make systematic appearances in the media with positive messaging and maximum transparency about pension fund investments.

Recommendation N3: Government and non-governmental organizations, self-employed individuals, and other participants of the pension scheme should be familiar with the pension law, the investment policy of the State Pension Agency, and instructions that they should follow to fulfill their obligations. Any person who can acquire knowledge on which pension reform and the investment policy of the State Pension Agency are based will be ensured that the chances of "losing savings" are practically zero, and to be the part of pension system is the opportunity to have adequate standard of living at retirement age.

Recommendation N4: It is necessary to be determined the target replacement ratio and the method of its calculation at the legislative level.  Reckoning replacement rate statistics should logically be carried out by the National Statistics Office of Georgia, and the body responsible for achieving the target replacement rate should be determined, for example, the Ministry of Economy and Sustainable Development of Georgia. The mentioned changes will contribute to the formation of the right expectations of the citizens and the correct planning of their income at retirement age.

Recommendation N5: Short- medium- and long-term investment KPI - Key Performance Indicators should be determined, risk limits and indicators of risk-bearing capacity, which will provide a more comprehensive view and assessment of the results presented by the Pension Agency to its beneficiaries.