Governance Challenges and Future Development Prospects of Georgia’s Pension Reform

This article examines Georgia’s pension reform from a governance perspective and assesses whether the emerging multi-pillar model can ensure adequate, fiscally sustainable and institutionally credible old-age income protection. The study is based on documentary material developed in a master’s thesis, content analysis of legal and policy documents, a comparative review of four pension systems – Armenia, Sweden, Kazakhstan and Chile – and five in-depth interviews with representatives of the Pension Agency, the Ministry of Economy and Sustainable Development and the insurance sector. The central research question concerns the governance challenges revealed during the implementation of the pension reform and the institutional conditions required for the next stage of reform.

The findings indicate that the first pillar remains indispensable for poverty prevention and for guaranteeing a minimum social income in old age. Its long-term viability, however, depends on the consistent application of the indexation rule and on the monitoring of budgetary pressure. In the second pillar, the main challenges were the flexibility of the institutional structure, the establishment of investment infrastructure, the shortage of domestic expertise in asset management, the limited depth of the capital market and the level of public trust. The 2024 legislative amendments, which replaced the previous two-board model with a unified governing board, partly responded to the governance weakness identified in the research. At the same time, the new arrangement increases the importance of fiduciary independence, transparent appointments and safeguards against political influence. The introduction of the third pillar creates an opportunity to develop voluntary savings, private-sector competition and employer-based benefits; however, its effectiveness will depend on tax incentives, prudent supervision, product quality and citizens’ financial literacy. The article concludes that the success of Georgia’s pension reform should not be measured only by the amount of accumulated assets. More decisive indicators are the transparency of governance, the quality of risk management, the protection of participants’ interests and the coherent coordination of all three pillars.