The pension system in Azerbaijan consists of two elements:

(i) A notional defined contribution (NDC) social insurance program: implemented in 2006, is financed by an employee contribution of 3% of gross earnings and an employer contribution of 22% of payroll. 

(ii) A non-contributory social assistance program: funded by general revenues, provides benefits to non-working men aged 67 or older and women aged 62 or older who are not eligible for the earnings-related pension.

Benefits are adjusted annually to changes in the consumer price index for the previous year. 

In October 2009, Azerbaijan's parliament amended the social insurance program by gradually increasing the retirement age for a full earnings-related pension. As a result, as of January 2010, the retirement age increases by 6 months every year until it reaches 63 for men and 60 for women (instead of 62 for men and 57 for women).

According to the government agency responsible for the social insurance program (the State Social Protection Fund) increasing the retirement age is necessary in order to reduce the financial burden of a rapidly aging population. The United Nations projected an increase in the percentage of the population aged 60 or older from 8.9% in 2005 to 25.2% in 2050.


Article with courtesy of Social Security Online

Sources: Social Security Programs Throughout the World: Asia and the Pacific, 2008World Population Prospects: The 2008 Revision, United Nations, 2008; "Azerbaijan Parliament Ratifies Amendments to Increase Retirement Age," Trend News Agency, October 27, 2009; "International Headlines," Mercer, November 4, 2009; "Azerbaijan Adopts Unpopular Amendments to Pension Legislation,", November 9, 2009.

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