Azerbaijan's Social Protection Fund Implements Incremental Pension Indexation

In a recent press conference, Himalay Mamishov, Chairman of the State Social Protection Fund (SSPF), announced a pivotal shift in pension policy, with the adoption of an indexation approach to annual pension increases. This new methodology will result in a yearly increment applied across all types of pensions, providing beneficiaries with a measure of financial stability.

Mamishov clarified that the indexation calculation would commence from January 1, with the resultant increase taking effect in February. The anticipated indexation for this year is set at 10.8 percent, an adjustment that some experts deem modest given the prevailing economic circumstances.

Arzu Nagiyev, a member of the Labour and Social Policy Committee of the Milli Majlis, told Turan that  that pension indexation is not tied to inflation rates but rather mirrors salary increases. The exact figure for this indicator is yet to be determined, making it challenging to predict whether the forthcoming pension increase will be more or less than the projected 10.8 percent.

Nagiyev underscored the protective role of indexation, emphasizing its role in preventing the devaluation of pensions. He noted that over the past 3-4 years, pensions have experienced a cumulative increase of approximately 50 percent, reflecting a commitment to enhancing the social protection of pensioners.

Economist Natig Jafarli presented a detailed perspective to the Turan agency, stressing that the indexation of pensions is associated with the growth rate of average monthly wages. Despite this, Jafarli argued that the fundamental challenge lies not in the indexing mechanism but in the inadequacy of the pension amounts. With the median pension in Azerbaijan hovering around 400 Manats, he stressed the urgency of raising the minimum and average monthly pensions to bring about tangible improvements, even if the indexing percentage remains relatively low.