Azerbaijan to calculate pensions on the basis of seniority

Azerbaijan to calculate pensions on the basis of seniority
# 02 October 2008 12:46 (UTC +04:00)
According to him, the proposal will help change the mechanism used for determining pension rights of those who retired on the basis of the old pension system effective before January 1, 2006.
Muslimov said that a pension benefit consists of two parts: «The first part of the pension, covering the period prior to January 1, 2006, is calculated on the basis of old pension system law. The second part is determined on the basis of individually -insured, state-funded pension accounts system, introduced after January 1, 2006. There are no problems in calculating the second part of the pension. Each person has an individual account, based on contributions he or she made since January 2006. However, in order to determine pension benefit before January 1, 2006, a certificate of the average salary for 2004-2005 is required. Based on this information, the pension benefit is set for the period before January 1, 2006. The negative aspects of the pension system appear during this period while calculating the first part because false certificates are extracted from archives and previous alleged workplace,” he added.
New proposals are prepared to tackle the problems. Under the proposals, the definition of the first part of the pension (prior to January 1, 2006) shall be based on work record certifying how many years you worked rather than wages.
Muslimov said that these rules will apply only to those who retire after the introduction of new mechanism.
If the proposals are approved before the end of this year, the system will be effective from January 1, 2009.
Under the new system of calculation, the amount of pension benefits will depend on seniority that is to say how many years you are employed.
Pensions of about 200 000 are based on the new pension system currently.
About 1.05 million of 1263 million retirees receive pension benefits under the old system.