Lasha Nikoladze, head of the Insurance Union, describes Georgia’s private pension insurance market as “ephemeral” and says that under current economic conditions and state monopoly, there is practically no room for the development of private pension funds.
He notes that while the state pension fund’s assets exceed 6 billion GEL, insurance companies hold only around 6 million GEL in this segment.
“As of 2024, the non-state pension fund surpassed 6 billion GEL, while insurance companies have only 6 million. For private insurers, this topic is not even a drop in the ocean. Whatever changes the new law introduces, it cannot be decisive,” Nikoladzeleze told BMG.
According to him, several key factors prevent people from opting into private, voluntary pension systems. The main challenges are:
Low purchasing power – many households struggle with basic food expenses, making long-term savings a low priority.
The state already withholds funds under the mandatory “2+2+2” scheme, leaving no additional savings capacity.
“People can barely afford a food basket. Long-term investment might be their 50th priority. The state already takes contributions under the 2+2+2 system, so there is no room left for more saving.”
Nikoladzeleze also points to a lack of financial instruments as a major barrier:
“There are no instruments. Even if insurers get money, where should they invest? Put it back into bank deposits? It’s absurd. There’s no stock exchange, no real investment environment.”
Although the new legislation provides certain benefits, such as income tax exemptions for annual contributions up to 6,000 GEL, Nikoladzeleze believes this will not stimulate the market.
Voluntary private pensions correspond to the “third pillar” of the system. Their development is envisioned in the 2023 law on voluntary private pensions, prepared by the Insurance State Supervision Service, the Ministry of Economy, and ADB experts, and incorporated into Georgia’s 2023–2028 Capital Market Development Strategy.
