A scholarly article by Caucasus University Professor Tengiz Verulava, titled- “Pension system transformation in the South Caucasus: A comparative analysis of Georgia, Armenia and Azerbaijan”, has been published in the British international peer-reviewed journal European Journal of Social Security.
Article link.
According to the SCImago Journal Ranking (SJR), the European Journal of Social Security is classified as a Q1-level journal.
See: https://www.scimagojr.com/journalsearch.php?q=21100924769&tip=sid&clean=0
The journal is also indexed in the international scientific databases SCOPUS and Web of Science.
Abstract
The study examines the development of pension systems in Georgia, Armenia, and Azerbaijan within the broader context of post-Soviet social protection transformations and efforts to ensure financial sustainability. Following the dissolution of the Soviet Union, all three countries inherited a pay-as-you-go (PAYG) pension scheme, which has undergone reforms at varying paces and in different directions. Georgia transitioned to a mandatory funded scheme in 2019, Armenia introduced a mixed model (PAYG plus a funded system) in 2014, while Azerbaijan remains predominantly reliant on a PAYG structure.
Using a comparative analytical framework that incorporates institutional and fiscal factors, the article evaluates the structure, coverage, adequacy, and sustainability of the pension systems across the three South Caucasus countries. Currently, pension coverage stands at approximately 47% in Georgia, 52% in Armenia, and 58% in Azerbaijan. The average monthly pension amounts to USD 135 in Georgia, USD 130 in Armenia, and USD 289 in Azerbaijan, while the income replacement rate is 18%, 19%, and 47% respectively—figures that clearly reflect significant differences in income levels and contribution capacities.
Demographic and macroeconomic projections indicate that, without further reforms, population ageing will intensify fiscal pressures, and pension expenditures may rise from the current 7–9% of GDP to approximately 11–13% by 2040. The gradual growth of accumulated pension assets in Georgia and Armenia will partially mitigate this burden, whereas Azerbaijan’s pension system is likely to encounter sustainability challenges unless diversification and partial capitalization measures are implemented.
The findings demonstrate that, despite meaningful progress in expanding coverage and strengthening institutional frameworks, systemic weaknesses persist—particularly in connection with high levels of informal employment, limited contribution compliance, and weak governance of pension assets. The study concludes that ensuring long-term financial sustainability requires a balanced approach combining parametric reforms, investment diversification, stronger oversight mechanisms, and targeted policies aimed at reducing the size of the informal labour sector.
