Funded pension

Georgia’s funded (defined-contribution) pension, introduced by the Law on Funded Pension, is the country’s only statutory payroll contribution — there is no separate social-security, health or unemployment charge on wages. Each month a slice of your pay goes into an individual account held in your name. Three parties feed that account: you, your employer, and the state. Only your own share reduces your take-home pay; the other two are added on top and never come out of your net.

Three contributors, one account

The employee contributes 2% of gross. This is the only leg that lowers your net pay, and — importantly — it is subtracted before income tax is worked out, so it is not taxed (see the income-tax page for why that matters). The employer adds a further 2% of your gross, paid at its own cost and on top of your salary; it is not a deduction from your pay and, under the Tax Code, is not treated as taxable income to you. That means for a typical earner 6% of gross flows into the individual account each month — your 2%, the employer’s 2%, and the state’s share below.

The state co-contribution is tiered

The state’s contribution is the one part that is not a simple flat percentage. It is assessed on your annual salary or income and steps down as you earn more:

• 2% of income on annual earnings up to 24 000,00 ₾;
• 1% on the portion of annual income between 24 000,00 ₾ and 60 000,00 ₾;
• 0% on any portion above 60 000,00 ₾.

So the state matches your own 2% in full for lower and middle earners, tapers its share once annual income passes 24 000,00 ₾, and stops adding anything once you cross 60 000,00 ₾. Because the tiers are annual, the calculator annualises your monthly gross, applies the bands, and divides back to a monthly-equivalent figure — a “constant income across the year” assumption it states plainly. The employee and employer legs, by contrast, are a straight 2% and 2% of each month’s gross.

Who is enrolled, and can you opt out?

Enrolment depends on your age when the law took effect on 6 August 2018. If you were under 40 at that date, participation is mandatory and you cannot leave. If you were 40 or older, participation is voluntary: you were entitled to opt out of the scheme under the law’s withdrawal provisions. People who had already passed retirement age at the law’s entry into force — 60 for men, 55 for women — were excluded from the scheme altogether. The calculator defaults to enrolled, since that is the case for most of the working-age population, but it lets you switch to the opted-out path to see the difference.

The choice matters for your net pay. Enrolled, you contribute 2% and keep 78,4% of gross after tax. Opted out, no pension comes off, income tax is charged on the full gross, and you keep 80% — a little more in hand each month, but nothing accumulating in an individual account and no employer or state contribution flowing into it on your behalf.

Why it sits apart from tax

It is worth separating the two ideas. Income tax is money that leaves for the state budget and does not come back to you. The pension is money that stays yours — it accumulates in an account in your name and is invested for your retirement. That is why the breakdown shows the employer and state contributions as their own rows, credited into the pot, rather than as cuts from your net: they are additions to your savings, not costs to your paycheck.

The full content of this page is still in preparation and subject to review.