The Government of Georgia plans to radically change the governance system of the Pension Agency.
According to the draft law, submitted to the Parliament by the Ministry of Economy, the Government of Georgia plans to take the issue of appointing the governance structure of the Pension Agency under its authority, therefore the Investment Council of the Pension Agency will be abolished. The said board, which is approved by the parliament, is currently composed of 4 members and it is this board that makes decisions regarding the investment of pension assets.
According to the bill, the investment council will be replaced by a 15-member board. The new board will be responsible for both fund management and the asset investment process by the fund, unlike the current system where the investment board is directly responsible for the investment process. At the same time, the contribution of the parliament to the new council's staffing is radically reduced, and it actually goes entirely to the side of the government.
In the board of the Pension Agency, which will be composed of 15 members, 2 members will be directly appointed by the government of Georgia, and the remaining members will be selected through an open competition, however, unlike the current model, their selection commission will be directly composed of government members.
More specifically, the selection commission that will choose the board of the Pension Agency will be as follows:
- Minister of Finance of Georgia;
- Minister of Economy and Sustainable Development of Georgia;
- Minister of Labor, Health and Social Protection of IDPs from the Occupied Territories of Georgia;
- 3 members of the Parliament of Georgia;
- 1 independent member.
Accordingly, 2 of the 15 members of the Board will be directly appointed by the government without competition, while the selection commission for the remaining 13 members will also be appointed by the government, which actually means that the government will have the final decision on the appointment of the entire board.
The 15-member council itself will be divided into three committees, namely: a) Investment Committee; b) risk committee; c) Audit Committee.
Currently, the Investment Council is composed of 4 foreign members, who were selected by the Parliament as a result of an international competition. They are - Olivier Rousseau (Chairman), Jean-Frédéric Poulsen, Michael Ridley and Timo Viherkenta. The said Board will be abolished.
The same bill increases the administrative expenses of the Pension Agency, for which the management fee is increased. If according to the existing law, the pension agency receives a management fee of 0.5%, with the new change, the fee increases to 0.75%.
Currently, Pension Agency's assets amount to GEL 4.9 billion, and it represents the pension savings of 1.3 million citizens.
