The Parliamentary Secretary to the President of Georgia, Giorgi Mskhiladze, explained why Salome Zourabichvili did not sign the amendments to the law on cumulative pensions.
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"With the changes made, the members of the pension fund's management board will be appointed by the Prime Minister, whereas the members of the fund's investment board were previously elected by the Parliament. It is unacceptable and inadmissible to withdraw this process from the Parliament, concentrating such power in the hands of the Prime Minister.
This change creates a risk that the council will be staffed by individuals who represent the interests of the ruling power. This would allow the fund's investments to be directed by political decisions of the ruling power into various low-profit government projects, which will not serve the best interests of the population.
The pension reform was considered one of the successful reforms in Georgia, making it unjustified to accept such changes that damage the reputation of this reform and shake the confidence of the population in it. A solid pension system and its reliability are directly related to the well-being of citizens. Accordingly, we call on the Georgian government to act in the interests of more than one and a half million citizens of Georgia," Mskhiladze said.
The Parliament considered the amendments to the law on cumulative pensions in the third reading on June 27 and adopted them with 75 votes. Sixty-six votes came from members of the Georgian Dream faction, and nine votes from deputies of the ruling party's satellite group, People's Power.
Based on the adopted law, the name of the pension agency is changed to the Georgian Pension Fund, and changes are included in the management rules. Specifically, a new management board will be created in the pension fund, replacing the current supervisory and investment boards. Based on current legislation, the members of the Investment Council are elected by the Parliament; however, with the proposed changes, the professional members of the council will be appointed and dismissed by the Prime Minister. Additionally, a Pension Fund Directorate will be established as an executive body, with its members appointed and dismissed by the governing board. The changes also increase the limits for investing in other types of assets. The amendments also provide for the possibility of outsourcing any activity of the pension fund, for which the consent of the National Bank will be required.
According to Transparency International - Georgia, these legislative changes weaken the independence of the pension fund and its ability to supervise, which is a crucial guarantee for the effective management of funds mobilized in the fund. Currently, there are 5 billion GEL in the pension fund, which includes pension provisions for more than one million citizens of Georgia.
President Salome Zourabichvili did not sign the law on cumulative pensions and returned it to the Parliament. The amendments will enter into force with the signature of the Speaker of the Parliament, Shalva Papuashvili.
