Key concepts: founder, contributor and participant
Non-state pension provision of physical persons means the regular payment of monetary funds — pensions — to individuals, at the expense of pension contributions of physical and legal persons and of investment income. The activity carried out for this purpose includes the establishment of pension schemes, the accumulation and recording of pension contributions, the formation of pension accumulations and the regular payment of pensions to individuals. A non-state pension scheme is a system of relationships between physical and legal persons in this sphere — and it is within the scheme that the participant’s rights and obligations arise.
The law defines the subjects of the scheme: the founder is a legal person which establishes a pension scheme and provides physical persons with non-state pensions in accordance with the procedure set by the scheme; the contributor is a physical or legal person which pays a pension contribution for the benefit of the scheme’s participant; the participant is a physical person for whose benefit pension contributions are paid and a pension is granted. A pension accumulation is the funds recorded in the nominal pension account of a participant or participants, and the nominal pension account is the form in which the movement of these funds is recorded. A pension contribution is the contribution established by the scheme which contributors pay for the purpose of non-state pension provision.
Distinct roles in the scheme’s infrastructure belong to the asset management company — a commercial organisation which, on the basis of an appropriate licence, manages and invests pension accumulations — and to the specialised depositary, which accepts and holds documented securities and records the non-documented securities that form part of the corresponding assets of the accumulations. The assets permitted to cover the accumulations are determined under the rules of the National Bank of Georgia. Participants’ interests are defended by the founder’s supervisory board, the organ that oversees the provision of citizens with non-state pensions. The law also defines a subsidiary enterprise — a legal person in which the founder owns 50 percent or more than 50 percent of the share (voting shares, participation interest), or, where the formation has no legal status, controls it — and a branch, a structural subdivision of the founder in which the activity defined by its charter, or a part of it, is carried out directly.
Ownership of the pension accumulation and payment of the pension
The participant of a pension scheme is considered the owner of the nominally accounted amount — in other words, the accumulation recorded in his name belongs to him as his property. The only exception is the funds transferred to the fund of accumulations for the payment of permanent pensions. This means that the participant has a proprietary interest in his accumulation, and the law recognises that interest with the status of an ownership right.
The pension is granted to the participant after he reaches the pension age established by the legislation of Georgia, within one month from the submission of the application. A pension may also be granted before pension age is reached — in the case where the participant has partially or completely lost his working capacity. The law itself does not set the exact boundaries of pension age: they are determined by other legislation, so in a concrete case establishing the age criteria requires reference to those other norms.