Pensions are indexed by 11.2%

President Ilham Aliyev has signed an order on the indexation of labor pensions in Azerbaijan. According to the directive, the Ministry of Labor and Social Protection of the Population is instructed to index the insurance part of labor pensions assigned before January 2024 in accordance with the annual growth rates of the average monthly nominal salary determined by the State Statistics Committee from January 2023.

The order extends this indexation to the amounts of pension capital accounted for in the insurance part of individual personal accounts, providing an integrated approach to ensuring that the financial well-being of pensioners corresponds to the development of the economy. The Cabinet of Ministers was instructed to resolve the issues arising from this order, which reflects the Government's commitment to the effective implementation of these measures.

According to this new presidential decree, all types of pensions in Azerbaijan should be increased by 11.2 percent. The Ministry of Labor and Social Protection of the Population stressed that this step is part of the ongoing efforts to strengthen the social protection of pensioners and increase the total amount of pensions.

It is important to note that this increase applies to pensions, which include additional superannuation payments and financial assistance, while adjustments are automatically processed through an electronic system. Pensioners are not required to submit additional documents or applications for promotion.

The payment of increased pensions for January will coincide with the regular payment of pensions for February. For example, if a pensioner's monthly allowance is 500 manats, then an 11.2 percent increase of 56 manats will bring the total amount to 556 manats, while the January increase will be smoothly added to the February pension.

The total annual cost of this pension increase is estimated at about  630 million manats, which will benefit about 1.1  million pensioners.

It is noteworthy that this increase by indexing covers all types of pensions, including those that are assigned on a general basis, and additional pensions for years of service, for example, to military personnel and law enforcement officers.

Exceeding the average inflation rate for 2023, which was 8.8 percent, and the increase in indexation introduced by the decree demonstrates the government's commitment to ensuring that pensioners keep pace with economic development and the rising cost of living.

In addition, the pension capital accumulated in the individual accounts of insured persons until January 2024 will also be indexed and increased by 8.8 percent in accordance with the annual level of the consumer price index. Such a dynamic approach emphasizes that pension capital increases not only due to social insurance contributions, but also due to mandatory indexation by the state at the beginning of each year.

In light of statistical data indicating a slowdown in the average annual inflation rate at the end of 2023 to 8.8%, compared with 13.9% in 2022, these measures mean an active response by the Government of Azerbaijan to strengthen economic stability and provide tangible benefits to pensioners.