In Georgia, 1,166,737 people participate
in the funded pension scheme and
contribute 6% of their salaries monthly to the pension fund. At the moment, the
fund has accumulated GEL 1.7 billion.
The other day the pension
agency presented to parliament a report on the work done in the first half of
2021, and as it turned out, the funds accumulated in the fund were placed on
deposits in 8 commercial banks at 11, 15% per annum.
“70.3% of the amount is
invested in deposit certificates and time deposits, a fixed interest is charged
on them, the remaining 29.7% are placed in deposits with a variable interest
rate. The placement of assets complies with the Georgian law on accumulative
pension - in particular, banks have a high credit rating, and the fact of
placing funds in 8 banks excludes the concentration of amounts and violation of
the rules of antimonopoly legislation. The average maturity of certificates of
deposit and term deposits is 2.5 years, the average term of the total portfolio
is 1.7 years, ”the pension agency says.
From January 1, 2019 to June
30, 2021, the fund's profitability was 24.5%, with inflation of 17.8%. in the
reporting period, the lari has lost 18.2% of its value, and given all this the
question arises of how profitable is to keep the savings in the national
currency for many decades ahead amid annual devaluation?
Former director of the Pension
Agency Levan Surguladze believes that inflation is currently the biggest threat
to savings in the pension fund.
“The situation with term
deposits is quite difficult as despite the high interest rate, it is very
doubtful that the profit from the deposits could compensate for the inflation
rate and the laris devaluation. While the profitability of deposits with a variable
interest rate is tied to the central bank’s refinancing rate. The rate rises
when inflation rises, but as a rule, inflation rises faster than the
refinancing rate. In 2020, inflation was relatively low, but in the third
quarter of 2021 it rose significantly and the fund's savings went negative.
Besides, what matters is the fund's annual profitability and not throughout the
entire period of its existence, ”he explains.
According to Surguladze, the devaluation of the
national currency also has a negative impact on the fund's profitability.
“To ensure some stability of
deposits, it would be correct to use a clause in the law that allows keeping
20% of the fund's accumulations in foreign currency, but now it makes no sense
- when the law was adopted, the interest on deposits in foreign currency stood
at 5-6%, now it is several times lower, ”he points out.
In the words of the former Director of the Fund,
when the fund was created, it was envisaged that placing of deposits in
Georgian banks was a temporary solution and later the funds were planned to be
placed in securities on Western stock markets, but the process has not begun