The State Social Protection Fund[1] reported that the average monthly amount of pensions in Azerbaijan reached 423 manats; moreover, the average monthly amount of age-related pensions reached 456 manats. Currently, the minimum labor pension in Azerbaijan is 280 manats. Although the subsistence minimum for 2023 is officially set[2] at 246 manats, 261 manats for the working population, 199 manats for pensioners, and 220 manats for children, these indicators are questionable by independent experts. So, they believe that the norms of food products, non-food goods, and services included in the minimum consumption basket in the Republic of Azerbaijan approved by the Resolution of the Cabinet of Ministers of the Republic of Azerbaijan dated June 6, 2014, No. 182, are not correctly determined. The calculations are not made based on actual prices. At the same time, the Cabinet of Ministers does not annually update the norms[3] of food, non-food, and service costs included in the minimum consumption basket; furthermore, the amount of the subsistence minimum is calculated only by one criterion for the republic, the relevant calculations are not carried out taking into account the needs and prices of economic regions, especially the amount of the subsistence minimum should be calculated not on the same basis, but differently for children aged 0-16 years, taking into account the needs of the 0-5, 6-10, 11-15 age groups. It is the result of the incorrect calculation of the amount of the subsistence minimum and the low amount of paid pensions that pensioners cannot meet their needs with special funds and resort to borrowed funds. So, according to the Financial Stability Report[4] of the Central Bank in 2022, each pensioner in Azerbaijan owed an average of 775 manats to banks last year, which is more than twice the average monthly amount of pensions paid for that year. In 2022, the number of loans granted to pensioners amounted to 863.1 million manats, 185.3 million manats or 27.3 percent more than the previous year. So, in 2022, the amount of debt per pensioner was 774.6 manats, which means an increase of 110 manats or 37.2 percent per pensioner compared to the previous year. Because the number of pensioners decreased during the year, their debts to banks also increased, resulting from the effectivenessness of social protection measures. Table 1 shows the data on pensioners’ borrowing for the last 4 years.

Table 1. Loans granted to pensioners in 2018-2022

YearsDebt, in a million manatsDebt per pensioner, in manats

Source: Central Bank of the Republic of Azerbaijan, Financial stability report -2022, page 31

Other problems of pensioners in Azerbaijan are related to retirement age. As of July 1, 2020, the retirement age for men has been raised to 65, according to the 10-year transition schedule for extending the retirement age starting from 2017, and the retirement age is expected to be increased by 6 months every year to 65 from July 1, 2026, for women. Currently, the retirement age for women is 63, and from July 1, 2023, the retirement age for women will be calculated from 63 years and 6 months. So, Azerbaijan will rank first among the former Soviet republics due to the higher retirement age for both women and men. The current situation is presented in Table 2 in comparison with other countries.

Table 2. Retirement age in post-Soviet countries, in years


Raising the retirement age has led to a decrease in the number of pensioners in Azerbaijan and a decrease in the expected pension payment period after retirement. Although both trends reduce the pension costs of the public social security fund, pension payments still do not satisfy most retirees. On the other hand, the rapid increase in the retirement age has created a mismatch between life expectancy at birth. So, according to the calculations[5] of the State Statistical Committee on life expectancy at birth, this indicator is expected to be 66.8 years for men and 74.3 years for women born in 1970-71, 65.2 years for men and 72.8 years for women born in 1975-76, 64.5 years for men and 72.2 years for women born in 1980-8. As you can see, life expectancy in Azerbaijan is not increasing but rather decreasing.

Therefore, men born in 1970 who will retire in 2035 will receive a pension for an average of 2.8 years, and men born in 1975 who will retire in 2040 will receive a pension for an average of 0.2 years. Since the average life expectancy for men born in 1980 is 64.5 years, they will not live to retirement age and will not receive a pension. Therefore, one of the main tasks that must be solved before the government is not to raise the retirement age but to lower it.

As for the beginning of 2023, the number of pensioners in the country reached 1,115 people, accounting for 11% of the country’s population[6]. It means there are 110 pensioners for every 1,000 people. The current situation in other CIS countries is presented in Table 3.

Table 3.  Number of pensioners in the CIS countries (as of January 1, 2020)

CountriesNumber of pensioners per 1,000 people

The data in the table characterizes the number of pensioners as of January 1, 2020. Since then, the number of pensioners per 1,000 people in Azerbaijan has been lower than 110 due to the increase in the population and the decrease in the number of pensioners. In such a case, if the relevant indicators in the countries included in the comparison remain unchanged, Azerbaijan can surpass only Tajikistan among the CIS countries regarding the number of pensioners per 1,000 people. The dynamics of the number of pensioners[7] in Azerbaijan in the last 10 years can be seen in Table 4.

Table 4. Number of pensioners in Azerbaijan

YearsNumber of pensioners, in 1,000 people

As can be seen from the table, the number of pensioners in Azerbaijan has decreased by more than 200,000 in the last 5 years. At the same time, the expected pension payment period of the pensioners is also decreasing. This situation is presented in Table 5 in comparison with other countries.

Table 5. Expected pension payment period in years

CountriesExpected pension payment period, years
Great Britain17,67

Table 5 answers how many years citizens live after retirement by country. When calculating the pension amount, this period is taken as 12-year months. Thus, the insurance capital everyone collects legally receives divided by 144, and the received amount is paid as a monthly pension. The number 144 (12 years x 12 months = 144) characterizes the average expected retirement period of our elderly citizens who have reached the retirement age and are entitled to 12 years. But official statistics show that pensioners live 7-8 years after retirement and are given an average of 8 years of pension instead of 12 years. In such a case, the insurance capital collected by everyone who retired should be divided not by 144 but by 96 (8 years x 12 = 96). This creates a serious difference between the pension amount paid. So, let's assume that you have reached retirement age and 56,000 manats capital has accumulated in your insurance account. Dividing this amount by 144 equals 388 manats per month (56,000/144=388), but you have an average of 8 years of retirement, not 12 years. If you divide that amount by 96, the average monthly pension amount is not 388 manats, but 583 manats (56,000/96=583). Therefore, due to this social injustice, up to 200 manats are deducted from the pensioner with 56,000 insurance capital every month. Therefore, in order to restore justice, either the retirement age should be reduced to 55 for women and 60 for men, or the pension calculation methodology should be changed; the accumulated insurance capital should be divided by 96 instead of 144.

The main reason why the expected payment period of pensions in Azerbaijan is significantly lower than in other countries is the higher retirement age and the increase in the number of people who died before retirement age in recent years. Demographic indicators calculated based on the information of the SSC[8] are presented in Table 6.

Table 6. People who died before retirement age in Azerbaijan, by percentage

 The special weight of those who died before the retirement age in the number of deaths for that year, in percent
 Men Women

Source: State Statistical Committee  

As can be seen, especially the high retirement age for men and their lower life expectancy at birth compared to women caused the increase in the specific weight of men who died before the retirement age in the number of deaths in that year. This growth was significantly affected by the martyrdom of 3,000 young Azerbaijanis during the war with Armenia in 2020.










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