On Funded Pension

Law of Georgia

On Funded Pension

Article 1. Scope of the Law🔗

1. This Law regulates relations related to funded pension.

2. Relations related to funded pension shall be implemented independently of the provision of state pension and state compensation.

3. The purpose of this Law is to ensure the management of pension assets within the framework of the funded pension scheme in accordance with the interests of the participants.

4. This Law shall apply to:

a) employers;

b) citizens of Georgia;

c) citizens of foreign countries holding a permanent residence permit in Georgia and stateless persons holding a permanent residence permit;

d) activities related to the funded pension scheme carried out by asset management companies, specialized depositaries, commercial banks, insurance companies and other persons.

Law of Georgia of 1 November 2023 No. 3601 – website, 20 November 2023.

Article 2. Definition of terms🔗

For the purposes of this Law, the terms used herein have the following meaning:

a) affiliated person − for any person:

a.a) holder of more than 10 percent of the voting rights in a share participation or holder of less than 10 percent of a share participation, who is able to exert direct or indirect influence on the process of decision-making by this person;

a.b) any other legal entity, whose direct or indirect holder of more than 25 percent of the voting share at the same time directly or indirectly holds more than 25 percent of the voting share of this person;

a.c) person taking an investment or administrative decision or any member of a supervisory body;

b) asset management company – a legal entity with fiduciary duty licensed by the National Bank or the corresponding regulator of another state for the purpose of asset management, which carries out management of pension assets, or a person created or established by an international organization of which Georgia is a member state, for the purpose of asset management and/or providing investment advice, which is not subject to licensing by the corresponding regulators of individual countries;

c) asset allocation strategy − an investment strategy that includes the target indicators for allocation of different classes of assets in the investment portfolio, the basis for determining the target indicators and the permissible norms for deviation from the target indicators, which depend on the risk tolerance of the pension fund and/or the asset management company (companies), the investment period and investment objectives, and which may change over time in accordance with changes in these parameters;

d) funded pension scheme – a defined contribution pension scheme in which pension contributions to be made in favour of a participant are calculated in accordance with the procedure established under this Law and are reflected in his/her individual pension account, the benefit received is calculated only as a result of reflecting the pension contributions made and the income, expenses, excess income, losses and other income (if any) accrued in the individual pension account, and the pension/pension assets are issued in accordance with this Law;

e) employer – a person (except a non-resident person) who remunerates work performed and/or services rendered by an employee;

f) employee − a natural person who:

f.a) performs obligations within the framework of relations regulated by the civil legislation of Georgia and/or the labour legislation of Georgia or another state;

f.b) performs obligations related to his/her service in the Defence Forces of Georgia, law enforcement bodies and bodies equated thereto;

f.c) is the head (director) of an enterprise or organization or acting head (director);

f.d) is employed in a public institution in accordance with the Law of Georgia on Public Service;

g) lump-sum payment – a one-time payment of the full value corresponding to the pension assets recorded in the individual pension account;

g¹) Pension Fund − a legal entity of public law − the Pension Fund of Georgia;

h) National Bank – the National Bank of Georgia;

i) self-employed person – an individual entrepreneur as provided for by the Tax Code of Georgia, who is registered as a taxpayer in accordance with the legislation of Georgia, as well as an employee whose employer is not obliged to withhold income tax from the salary (at the source of payment), as long as he/she receives the income of a self-employed person;

j) income of a self-employed person:

j.a) in the case of an individual entrepreneur − income derived from entrepreneurial activity as provided for by the Tax Code of Georgia and subject to income tax;

j.b) in the case of a natural person as provided for by paragraph 1 or 2 of Article 3 of the Law of Georgia on Entrepreneurs − income subject to income tax;

j.c) in the case of an employee whose employer is not obliged to withhold income tax from the salary (at the source of payment) − salary subject to income tax;

k) individual pension account – a form of accounting created by the Pension Fund for a participant, which reflects the pension contributions made in his/her favour, information on the portfolio units owned by the participant, the results of the management of pension assets, the amounts withdrawn in accordance with this Law and all expenses related thereto;

l) participant – an employee or self-employed person enrolled in the accumulative pension scheme;

m) person with fiduciary duty – a person defined by Article 14 of this Law;

n) pension – the amount received/to be received as a result of the participant's participation in the accumulative pension scheme in accordance with Articles 32 and 33 of this Law, reflected in his/her individual pension account, the calculation, assignment and payment of which to the participant is carried out in accordance with this Law and in the amount and manner determined by the Pension Fund in accordance with this Law;

o) programmed withdrawal – the periodic withdrawal of a pension from an individual pension account in accordance with this Law;

p) investment policy document – a document developed by the investment committee of the Pension Fund, which determines the investment strategy and principles and by which the Pension Fund or the asset management company defined by Article 28¹ of this Law is guided, respectively, when taking decisions related to the management and investment of participants' pension assets;

q) pension age – the age determined by the Law of Georgia on State Pension;

r) pension assets − the aggregate of all assets recorded in an individual pension account. The Budget Code of Georgia does not apply to pension assets;

s) pension contribution – an amount paid in the name and at the expense of a participant, for his/her benefit, for the purpose of being credited to the participant's individual pension account, in the amount and in the manner determined by this Law;

t) (removed – 27.06.2024, No. 4312);

u) state security – a security issued by the State of Georgia;

v) State Treasury – a state sub-agency institution of the Ministry of Finance of Georgia – the Treasury Service;

w) (removed – 27.06.2024, No. 4312);

x) electronic system – an electronic system for the administration of pension contributions of the Pension Fund, provided by information technology, and the corresponding database;

y) specialised depositary – a legal entity with fiduciary obligations licensed by the National Bank or by the corresponding regulator of another state, or a branch of such person, which, on the basis of a corresponding contract, provides the Pension Fund with specialised depositary services, and also, in the case provided for by paragraph 12 of Article 26 of this Law – the National Bank;

z) investment horizon – a period of time during which, in accordance with the asset allocation strategy, taking into account the defined risk tolerance and the desired investment return, the Pension Fund and/or the asset management company plans to place investments in assets of a specific class or in an investment portfolio;

aa) investment portfolio – a set of investment instruments in which the composition of the instruments depends on the investment period, the investment objectives and the risk tolerance;

bb) temporary special administration regime – a temporary regime for the administration of the Pension Fund, which commences in accordance with this Law and the purpose of which is to ensure, by the National Bank, the continuity of the Pension Fund's activities;

cc) unit of an investment fund – a financial instrument which is a share/interest in an investment company or a unit in a joint investment fund;

dd) Revenue Service – a legal entity of public law within the sphere of governance of the Ministry of Finance of Georgia;

ee) limitation of abilities – a condition determined by the Law of Georgia "On Medical-Social Expertise", which is confirmed by an extract from the medical-social expertise act issued by the respective medical institution having the right to establish the status of limitation of abilities, and which determines the status of moderately, significantly or severely expressed limitation of abilities;

ff) selection commission – a commission which selects candidates for membership of the governing board;

gg) salary – income received within the framework of employment relations and/or by providing services, which is taxed at the source of payment in accordance with Article 101 of the Tax Code of Georgia (except for the income provided for by paragraph 2¹ of Article 101 of the Tax Code of Georgia and the income which, in accordance with Article 104 of the same Code, is not classified as income received from a source in Georgia, as well as income from royalties, rent, lease and investment income);

gg¹) annual salary/annual income – for a participant − the salary/self-employed person's income received from 1 January to 31 December inclusive of one year; for a new participant who has joined the cumulative pension scheme − the salary/self-employed person's income received from joining until 31 December of the same year inclusive;

gg²) (removed - 01.11.2023, No. 3601).

gg³) risk management – a set of coordinated actions of the structural units and the governing body of the pension fund, by which the pension fund carries out risk management;

gg⁴) (removed - 27.06.2024, No. 4312);

gg⁵) (removed - 27.06.2024, No. 4312);

gg⁶) (removed - 27.06.2024, No. 4312);

gg⁷) (removed - 27.06.2024, No. 4312);

gg⁸) pension recipient − a person who was a participant and who, in accordance with this Law and the procedure established by the pension fund, receives a pension/pension assets;

gg⁹) portfolio unit − a unit confirming the holding of a share in the investment portfolio defined by this Law;

gg¹⁰) investment fund trading on a stock exchange − an investment fund whose units are traded on a recognised stock exchange of a foreign country defined by the legislation of Georgia and which updates financial indices in accordance with a pre-determined investment policy;

gg¹¹) investment fund − an investment fund defined by the Law of Georgia "On Investment Funds", including an investment fund trading on a stock exchange.

Law of Georgia of 2 August 2021 No. 895 – website, 04.08.2021.

Law of Georgia of 21 September 2023 No. 3531 – website, 12.10.2023.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 3. Accumulative pension scheme🔗

1. (Removed - 01.11.2023, No. 3601).

2. Participation in the accumulative pension scheme and the making of a pension contribution shall be mandatory for every employee, in the part of income received as each salary after the entry into force of Article 21 of this Law, except for an employee who reached the age of 60 (in the case of a man) or 55 (in the case of a woman) before the entry into force of this Law.

3. Participation in the accumulative pension scheme shall be voluntary for every employee who reached the age of 60 (in the case of a man) or 55 (in the case of a woman) before the entry into force of this Law, in the part of income received as salary, and for a self-employed person, in the part of the self-employed person's income. The making of a pension contribution in the name of and for the benefit of a participant who has voluntarily joined the accumulative pension scheme shall be mandatory in the part of income received as each salary by the employee or in the part of the self-employed person's income by the self-employed person.

4. The pension contributions of an employee who has joined the accumulative pension scheme shall be financed by the employer, the employee and the State in the amount and manner determined by this Law, while the pension contributions of a self-employed person who has joined the accumulative pension scheme − by the self-employed person and the State in the amount and manner determined by this Law.

5. An employee who reached the age of 40 before the entry into force of this Law and who does not wish to be a participant shall be entitled, in accordance with Article 22 of this Law, to withdraw from the accumulative pension scheme.

6. The pension contributions of a participant shall be financed as follows:

a) the employer, not later than the day of submission of the income declaration in the manner established by the legislation of Georgia, at its own expense, for the benefit of the employee, in the manner determined by the pension fund, shall transfer to the relevant account of the pension fund the amount of the pension contribution in the amount of 2 percent of the taxable salary paid to the employee in the reporting period and, on the basis of the relevant income declaration, shall make the pension contribution;

b) the employer, not later than the day of submission of the income declaration in the manner established by the legislation of Georgia, in the name and at the expense of the employee, in the manner determined by the pension fund, shall transfer to the relevant account of the pension fund the amount of the pension contribution in the amount of 2 percent of the taxable salary paid to the employee in the reporting period and, on the basis of the relevant income declaration, shall make the pension contribution;

c) organizations under the service of the State Treasury, as employers, shall make pension contributions in the amount determined by subparagraphs „a“ and „b“ of this paragraph, with the technical support of the State Sub-agency Institution of the Ministry of Finance of Georgia − the Treasury Service, in the manner established by the pension fund;

d) a self-employed person, on the day of submission of the income declaration in accordance with the procedure established by the legislation of Georgia, shall, in accordance with the procedure determined by the Pension Fund, transfer to the relevant account of the Pension Fund the amount of the pension contribution in the amount of 4 per cent of the income of the self-employed person received in the reporting period and, on the basis of the relevant income declaration, shall make the pension contribution;

e) in favour of the state participant, shall make a pension contribution to his/her individual pension account:

e.a) within the first GEL 24,000 of the annual salary/annual income in the context of the relevant calendar year − in the amount of 2 per cent of the taxable salary of the employee and/or the income of the self-employed person;

e.b) after the annual salary/annual income exceeds, in the context of the relevant calendar year, the amount determined by subparagraph „e.a“ of this paragraph − in the amount of 1 per cent of the taxable salary of the employee and/or the income of the self-employed person from the said amount up to GEL 60,000;

f) the State shall not make a pension contribution, in the context of the relevant calendar year, on the taxable salary of the employee and/or the income of the self-employed person above GEL 60,000.

7. The pension contributions provided for by this Law shall be made, and also settlements with employers and employees/participants (including the transfer/payment/return of the pension/pension assets by the Pension Fund) shall be effected, in the national currency of Georgia (GEL).

8. The amount received in the nominal holding account opened by the Pension Fund for the accumulation of pension contributions, which cannot be attributed to an employer registered in its electronic system, shall, on the day 10 years have elapsed from the date of its receipt, become part of the pension assets of the existing participants/pension recipients, after which the person effecting the transfer of this amount shall not be entitled to demand its return and/or to submit any claim to the Pension Fund, including a claim for compensation of damage. The Pension Fund shall be entitled to ensure the accrual of interest benefit on the amounts held in the nominal holding account opened for the accumulation of pension contributions. This benefit shall, in accordance with the procedure and periodicity determined by the Pension Fund, become part of the pension assets of the existing participants/pension recipients.

9. An employee shall be obliged, in order to voluntarily and/or re-join the funded pension scheme in accordance with this Law, to apply to the Pension Fund in accordance with the procedure determined by the Pension Fund.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4313 – website, 12.07.2024.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 4. Creation of the Pension Fund🔗

1. The Pension Fund is an independent Legal Entity of Public Law (LEPL) created on the basis of this Law, which is responsible for the implementation, management and administration of the funded pension scheme.

2. State participation in the activities of the Pension Fund is limited by this Law and legal acts adopted on its basis.

3. The Pension Fund carries out its activities independently, in accordance with this Law, the Statute of the Pension Fund and other legislative and subordinate normative acts of Georgia.

4. The structure, powers, rules of activity and other organizational issues of the Pension Fund shall be determined by the Statute of the Pension Fund.

5. With respect to the remuneration of employees of the Pension Fund, the restrictions and requirements established by the Law of Georgia on Remuneration of Labour in Public Institutions shall not apply to the Pension Fund.

Law of Georgia No. 3601 of 1 November 2023 – website, 20 November 2023.

Law of Georgia No. 4312 of 27 June 2024 – website, 12 July 2024.

Article 5. Administration of the accumulative pension scheme🔗

1. The Pension Fund, through the electronic system, provides technical support for the enrolment of participants in the accumulative pension scheme, registers participants, pension recipients and persons who have left the accumulative pension scheme, administers pension contributions in accordance with this Law and creates individual pension accounts for participants.

2. Obligations related to the making of pension contributions shall be performed with the technical support of the Revenue Service and through the electronic system, in accordance with the procedure established by a joint normative act of the Revenue Service and the Pension Fund.

3. The Pension Fund shall manage and administer the electronic system, including through third parties. To ensure effective administration, the Pension Fund is entitled, through the electronic service, to provide such third parties with the necessary information, including personal data, in accordance with the procedure established by it.

4. In addition to the enforcement purposes defined by Article 6 of this Law and provided for by the Law of Georgia "On Enforcement Proceedings", the Pension Fund, in relation to relations connected with the failure by an employer and the State to make a pension contribution in the name of/for the benefit of an employee, is not a creditor for the purposes of the Law of Georgia "On Rehabilitation and Collective Satisfaction of Creditors" and the Law of Georgia "On Entrepreneurs". In relation to pension contributions to be made in the name of/for the benefit of a participant, as well as in relation to a participant's claims against an employer arising from this Law, the creditor (creditors) is (are) the respective participant (participants) or the participant's heir (heirs). In the case of an application by a rehabilitation manager and/or a bankruptcy manager in accordance with the Law of Georgia "On Rehabilitation and Collective Satisfaction of Creditors", as well as in the case of an application by a liquidator in accordance with the Law of Georgia "On Entrepreneurs", the Pension Fund shall be obliged to provide the said person (persons) with the information available in the electronic system on the pension contributions made by the respective employer, as well as the information obtained as a result of comparison with the information available in the databases of the Revenue Service.

5. The Pension Fund shall process personal data about a participant in accordance with the Law of Georgia "On Personal Data Protection".

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 6. Violation of the obligation to make a pension contribution🔗

1. For the Pension Fund to carry out the activities provided for by this article, the Revenue Service shall provide it with relevant information in accordance with the procedure established by a joint normative act of the Revenue Service and the Pension Fund. The Pension Fund, as a result of comparing the information in the electronic system with the information received from the Revenue Service and/or taking into account paragraph 12 of this article, shall identify the fact of violation of the obligation to make a pension contribution (non-fulfillment of this obligation and/or fulfillment in violation of the term determined by Georgian legislation for making a pension contribution), and shall also detect the fact of overpayment of a pension contribution.

2. The Pension Fund shall be entitled to demand from any person, including an employer, a participant, a pension recipient, an heir of a deceased participant, and/or to receive from any person any information about a pension contribution and/or pension assets credited to an individual pension account and/or their correction, and to take this information into account when making a decision provided for by paragraph 3 and/or paragraph 3¹ of this article. At the same time, the Pension Fund shall have the right to demand from any person the return to the Pension Fund of any amount erroneously paid to it and, for the return of this amount, to carry out the measures provided for by Georgian legislation.

3. In case of identification, in accordance with paragraph 1 of this article, of the fact of non-fulfillment of the obligation to make a pension contribution (non-fulfillment of this obligation and/or fulfillment in violation of the term determined by Georgian legislation for making a pension contribution), a penalty shall be imposed on the employer, on the basis of a decision made in accordance with the procedure established by the Pension Fund, on the amount of the pension contribution that was not made or was made in violation of the relevant term, from the day following the deadline for making the pension contribution, in the amount of the National Bank of Georgia's monetary policy rate in effect for each overdue day plus 5 percent. The penalty shall be accrued from the date following the deadline for making the pension contribution and shall continue until the employer has fully made this pension contribution. The penalty provided for by this paragraph shall be imposed on the employer independently of the fine provided for by the Code of Administrative Offences of Georgia, in the case determined by the Pension Fund and in accordance with the established procedure.

3¹. In the event of identification of the fact of violation of the obligation to make a pension contribution (non-fulfilment of this obligation and/or fulfilment in violation of the time limit determined by the legislation of Georgia for making a pension contribution), the employer shall, on the basis of a decision taken in accordance with the procedure established by the Pension Fund, be imposed a fine determined by the Code of Administrative Offences of Georgia, except where, as a result of the correction/refinement of the relevant income declaration provided for by subparagraphs „a“ and „b“ of paragraph 6 of Article 3 of this Law, the employer makes the relevant pension contribution(s) in accordance with the procedure established by the Pension Fund. In the case provided for by subparagraph „c“ of paragraph 6 of Article 3 of this Law, the employer shall be imposed a fine determined by the Code of Administrative Offences of Georgia if it fails to make the pension contribution in accordance with the procedure established by the Pension Fund.

3². The imposition of a penalty and/or a fine on the employer in accordance with paragraphs 3 and 3¹ of this Article shall not release it from the fulfilment of the obligation to make a pension contribution under this Law. In the case provided for by this paragraph, the employer shall be obliged to make the relevant pension contribution at its own expense (without deduction from the employee's salary).

4. In the event of detection of the fact of an excessive pension contribution made in accordance with paragraph 1 of this Article, the Pension Fund shall be entitled to require the employer to correct the excess pension contribution in accordance with the procedure established by the Pension Fund. If the employer fails to correct the excess pension contribution within the time limit determined by the Pension Fund, the Pension Fund shall itself take the relevant measures to correct the said excess.

5. The amount of the fine provided for by paragraph 3¹ of this Article shall be transferred to the State Budget of Georgia, while the amount of the pension contribution and the penalty determined by paragraph 3 shall be credited to the participant's individual pension account in accordance with the procedure established by the Pension Fund.

6. The fine, pension contribution and penalty provided for by this Law shall be subject to compulsory enforcement on the basis of an individual administrative-legal act of the Pension Fund that has entered into force and an enforcement writ issued accordingly.

7. The Pension Fund shall be entitled, within the framework of administrative offence proceedings, to draw up a record of the administrative offence electronically, in accordance with the procedure established by it, and also to determine, in accordance with the procedure established by it, the cases in which a record of the administrative offence is not drawn up.

8. For the purpose provided for by this Article, the procedure and conditions for communication with the relevant persons, as well as for the delivery/notification of a record of the administrative offence and of any individual administrative-legal act to the relevant person, including by electronic communication, delivery/notification through another administrative body, shall be established by the Pension Fund.

9. The Pension Fund shall, in accordance with this Law, develop and approve the rules and procedures for the identification of the fact of violation of the obligation to make a pension contribution by employers, including organizations served by the State Treasury, and for the detection of the fact of excess payment of a pension contribution, for the imposition and enforcement of a fine and/or penalty interest, and for the return of the amount of an excess pension contribution, and, for the exercise of the said powers, shall establish the respective forms of administrative offence protocols.

10. The regulation defined by this Article, in relation to an excess pension contribution detected by the Pension Fund and an amount paid by mistake, shall not apply to those persons, including the heirs of a deceased participant, who, before 30 September 2024, received in full the pension/pension assets in accordance with the procedure established by law. Accordingly, the Pension Fund shall not require these persons to return the amount paid to them by mistake/excess as a result of the excess payment of the pension contribution.

11. If, as a result of the comparison carried out in accordance with this Article, the discrepancy identified in the 1-month period subject to verification, which implies a difference between the pension contributions made and those to be made in accordance with the law, does not exceed GEL 1, this shall not be considered as non-fulfilment of the obligation provided for by this Law. If the said period subject to verification exceeds 1 month, the indicated amount shall be determined proportionally.

12. If, as a result of the examination of the information/documentation received by the Pension Fund in accordance with paragraph 2 of this Article, its inconsistency with the information received from the Revenue Service and/or the information existing in the electronic system is revealed, the Pension Fund shall be entitled, when taking a decision and enforcing the decision taken, to be guided by the information/documentation obtained by it in the course of the said examination.

Law of Georgia No. 3601 of 1 November 2023 – website, 20 November 2023.

Law of Georgia No. 4312 of 27 June 2024 – website, 12 July 2024.

Law of Georgia No. 832 of 26 June 2025 – website, 30 June 2025.

Article 7. Rights and Obligations of the Pension Fund🔗

1. The Pension Fund shall manage the pension assets as a person with fiduciary duty, in accordance with the interests of the participants, pension recipients and their heirs.

2. The functions of the Pension Fund are:

a) management and administration of the accumulative pension scheme, ensuring its proper functioning;

b) investment of the pension assets in accordance with this Law and the investment policy document, the principles of prudent investment and the interests of the participants and their heirs;

c) carrying out other relevant activities provided for by the legislation of Georgia, including by this Law;

d) opening accounts with the National Bank, commercial banks and/or other financial institutions for the accumulation of pension contributions, the carrying out of investment activity and/or for other purposes provided for by and/or arising from this Law, and management of the pension assets (including the monetary resources held in the accounts of the Pension Fund's nominal holding) in accordance with the interests of the participants and their heirs;

e) management and administration of the electronic system;

f) conclusion of contracts, including:

f.a) with the asset management company (companies), the specialised depositary and persons supplying any services and/or goods necessary for the carrying out of investment activity or administrative activity;

f.b) with persons providing accounting, audit, legal, actuarial services and other services necessary for the Pension Fund;

f.c) on the acquisition and disposal of immovable property or movable property (including equipment or software) necessary for the activities of the Pension Fund;

g) requesting and receiving information on any transaction carried out in the name of the Pension Fund by the asset management company (companies), the specialised depositary and other persons providing services;

h) staffing the Pension Fund with employees and creating conditions of competitive remuneration of labour;

i) carrying out the necessary measures related to pension contributions, pension assets and the payment of pensions;

j) administration of the process of payment of the pension and the corresponding value of the pension assets to the participants, as well as, in the case provided for by this Law, to the heirs of the participants;

k) adoption of a decision, in accordance with the procedure established by this Law and by the Pension Fund, on the imposition, pursuant to Article 6 of this Law, of the obligation to make a pension contribution and of a warning/fine on a person who has violated the obligation to make a pension contribution.

3. The Pension Fund shall approve legal acts on the rules for payment of pension contributions, determining the forms for submission of information on pension contributions, submission of an application for claiming pension and pension assets, assignment and issuance of pension and pension assets, necessary for the management and administration of the funded pension scheme, as well as on other measures, rules and procedures provided for by this Law.

4. For the purpose of the performance by the Pension Fund of the obligations provided for by this Law and the effective administration of the funded pension scheme, any administrative body and/or person shall be obliged, within the scope of its competence, to provide the Pension Fund with any information necessary for the performance of its activities (including the personal data of a participant) in accordance with the legislation of Georgia.

Law of Georgia No. 3601 of 1 November 2023 – website, 20 November 2023.

Law of Georgia No. 4312 of 27 June 2024 – website, 12 July 2024.

Article 7¹. (repealed)🔗

Law of Georgia No. 3601 of 1 November 2023 – website, 20 November 2023.

Law of Georgia No. 4312 of 27 June 2024 – website, 12 July 2024.

Article 8. Special Functions of the Pension Fund🔗

1. The Pension Fund has special functions. Persons performing special functions shall ensure their effective performance in compliance with the principles of objectivity, fairness and independence. The special functions are:

a) investment function;

b) risk management function;

c) internal audit function.

2. The special functions defined by this Article shall be performed independently of one another.

3. A person involved in the performance of special functions shall, within the scope of his/her competence, submit any material information and recommendations to the governing board, which determines the necessity of taking appropriate and timely measures. If the governing board does not take appropriate and timely measures when a person performing a special function has identified material risks that threaten the interests of participants, or when the legislation of Georgia has been significantly and materially violated, the person involved in the performance of special functions is entitled, within the scope of his/her competence, to notify the National Bank thereof. When the person involved in the performance of special functions exercises the authority provided for by this paragraph, his/her appropriate protection shall be ensured in accordance with the rules established by the National Bank.

4. The investment function is a special function that implies investing pension assets within the investment horizon in order to maximize their real return (taking inflation into account), in accordance with the interests of participants, in compliance with the principles of prudent investment. The principles of prudent investment are:

a) maximizing the real return (taking inflation into account) of pension assets over the long term as a result of investing them;

b) diversification of investments;

c) safety of pension assets under conditions of long-term investment;

d) maintaining adequate liquidity.

5. The risk management function is a special function that shall be effective and properly integrated into the organizational structure and decision-making process of the Pension Fund. At the same time, this function shall be organized in such a way as to facilitate the functioning of the risk management system. For this purpose, the Pension Fund approves the relevant strategies, processes and reporting procedures necessary to identify, assess, monitor, manage and regularly report on risks at individual and aggregated levels. The risk management function shall cover at least the following risks:

a) management of assets and liabilities;

b) investments;

c) management of liquidity and concentration risks;

d) management of operational risks;

e) risk mitigation methods.

6. The internal audit function is a special function by which the adequacy and effectiveness of the Pension Fund's internal control system and other elements of the management system are assessed, including in the case of outsourced services. The internal audit function is an independent, objective, assurance activity, separate from the Pension Fund's other activities, which, through a systematic, disciplined and organized approach, evaluates and improves the effectiveness of the Pension Fund's governance process.

Law of Georgia No. 3601 of 1 November 2023 – website, 20.11.2023.

Law of Georgia No. 4312 of 27 June 2024 – website, 12.07.2024.

Article 9. Governing Board🔗

1. The Governing Board is the supreme governing body of the Pension Fund, consisting of no fewer than 9 and no more than 15 members.

2. The Governing Board consists of professional members and ex officio members. If the Governing Board has no more than 10 members, 1 member shall be an ex officio member, and if it has more than 10 members, there may be 2 ex officio members. An ex officio member may not be a state-political official.

3. In accordance with this Law, the professional members of the Governing Board shall be elected by the Selection Commission, which shall submit them to the Prime Minister of Georgia for appointment. The term of office of a professional member of the Governing Board shall be 5 years. If, by the time the term of office of a professional member of the Governing Board expires, a new professional member has not been appointed, the incumbent professional member of the Governing Board shall continue to exercise his/her powers until the appointment of a new professional member.

4. A person of good faith who has at least the education and work experience required for this position, including at least 5 years of professional experience in a managerial position, may be elected to the position of a professional member of the Governing Board. The number of members of the Governing Board, the rules and procedure for selecting persons to be elected to the respective positions, additional criteria for their education and work experience, as well as other requirements for their suitability, including the procedure for appointing ex officio members of the Governing Board and the maximum amounts and policy of their remuneration, shall be determined by a Resolution of the Government of Georgia. The needs of the Pension Fund shall be taken into account by this Resolution.

5. The majority of the members of the Governing Board shall be professional members who have at least 10 years of professional experience in the financial sector in finance, investments, economics, risk management or actuarial work, or at least 10 years of experience working as a director in any of these fields in the financial sector. 1 of the professional members determined by this paragraph shall not be a member of the Investment Committee or the Risk Committee. The Selection Commission shall announce a competition for the selection of the member of the Governing Board determined by this paragraph by publishing the relevant announcement both locally and internationally (including in at least 1 international financial publication).

6. A professional member of the Governing Board may not be a person who has been convicted of committing a grave or especially grave crime, financing of terrorism and/or legalisation of illegal income or another economic crime, as well as a person whose actions caused the insolvency or bankruptcy of a financial institution.

7. In the event of a request by the National Bank, a professional member of the Governing Board shall be released from office or his/her powers shall be terminated by a decision of the Prime Minister of Georgia, on one of the following grounds:

a) a guilty verdict of the court has entered into legal force in respect of him;

b) the court has recognised him as missing without trace or declared him deceased;

c) by a court judgment he was recognised as a recipient of support in accordance with the legislation of Georgia or of another state and no other matter is determined by the court judgment;

d) he has resigned from office or died;

e) by his action or inaction he has violated the requirements established by law and/or improperly exercised the powers conferred by law and improperly performed the obligations provided for by law. The dismissal of a member of the governing board from office on the basis of this subparagraph must be substantiated;

f) he has failed, three times in succession, to participate in a meeting of the governing board without a valid reason provided for by the pension fund charter.

8. The governing board shall, by a majority of its full composition, elect from among its members the chairperson of the governing board and his/her deputy. An ex officio member of the governing board or the executive director of the pension fund may not be elected as the chairperson of the governing board or as his/her deputy. Additional rules for the election and appointment of the chairperson of the governing board and his/her deputy shall be established by the pension fund charter.

9. When electing the chairperson of the governing board and his/her deputy, it shall be inadmissible for a member of the governing board to cast a vote for himself/herself.

10. The governing board:

a) develops and approves the pension fund charter and organisational structure;

b) determines the directions of the pension fund's activities;

c) ensures the compliance of the pension fund's activities with the requirements established by the legislation of Georgia, the pension fund charter and the relevant policy documents, and the effective and timely implementation of these activities in compliance with the pension fund's ethical norms;

d) in accordance with this Law, selects the executive directors of the pension fund by open competition and, in agreement with the National Bank, appoints them to office, and also, after prior notification to the National Bank, dismisses the executive directors from office. A member of the governing board is entitled to participate in the open competition for the selection of an executive director. In such case, the said member shall not participate in the process of the governing board's decision-making when selecting the executive director for appointment to the relevant office;

e) in accordance with this Law, establishes committees of the pension fund;

f) approves the documents defined by the pension fund charter;

g) reviews and approves policy documents related to special functions;

h) reviews and approves the annual budget and staff list of the pension fund submitted by the general director of the pension fund;

i) establishes the rules and criteria for selecting the asset management company and specialized depositary determined by Article 28¹ of this Law, and the criteria and rules (procedures) for determining the volume/class of pension assets to be transferred to asset management companies for management and the terms of their transfer;

j) is authorized, in order to receive recommendations, to create and convene an advisory group consisting of representatives of employees and employers. Members of the advisory group shall not constitute part of the Governing Board. The rules for the composition of the advisory group and the convening of its members shall be determined by the Statute of the Pension Fund. The National Bank has the right, if necessary, to require the Governing Board to exercise the power provided for by this subparagraph;

k) appoints an audit firm to conduct the external audit;

l) develops and approves the framework for managing conflicts of interest of the Pension Fund, which must at a minimum provide for mechanisms/rules for the disclosure and avoidance of possible conflicts of interest, including in the decision-making process;

m) carries out other activities determined by this Law and the Statute of the Pension Fund.

11. On the basis of decisions of the Governing Board, the Chairperson of the Governing Board, and in his or her absence − the Deputy Chairperson of the Governing Board, issues normative legal acts − resolutions, and individual administrative-legal acts − ordinances.

12. A member of the Governing Board may not simultaneously be a person affiliated with a member of the Selection Commission, the Executive Director of the Pension Fund (except in the case where this member of the Governing Board is simultaneously the Executive Director), a member of the Government of Georgia, or a manager or hired person of any person providing other services to the asset management company (companies), specialized depositary or Pension Fund, or a beneficial owner of a participatory interest of any person providing other services to the asset management company (companies), specialized depositary or Pension Fund, or a person affiliated with the asset management company (companies), specialized depositary or any other person providing services to the Pension Fund.

13. A member of the Governing Board is prohibited from receiving any gift or remuneration from the asset management company (companies), specialized depositary or persons affiliated with them, or from any other person providing services to the Pension Fund, or from taking a loan (except a loan taken on ordinary commercial terms).

14. The activity of a professional member of the Governing Board is remunerated activity and is financed from the annual budget of the Pension Fund.

15. Executive Directors of the Pension Fund shall not constitute half or more than half of the members of the Governing Board.

16. A professional member of the Governing Board may not, within 6 months after the expiry of his/her term of office, provide professional services to an asset management company that manages pension assets, or to a specialized depositary that provides specialized depositary services to the Pension Fund. If a professional member of the Governing Board cannot be employed during the said period due to the restriction established by this paragraph, he/she shall retain the existing official salary during this period.

17. The Governing Board shall be accountable to the Prime Minister of Georgia and the National Bank.

18. The rules for reviewing and publishing the policy documents of the Pension Fund defined by this Law and by the Charter of the Pension Fund shall be determined by the Charter of the Pension Fund.

Law of Georgia of 30 November 2022 No. 2208 – website, 15.12.2022.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 9¹. (repealed)🔗

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 10. Meeting of the Governing Board and Procedures for its Holding🔗

1. A meeting of the Governing Board shall be held as necessary, but not less than once every 3 months. A meeting of the Governing Board may be held using electronic means of communication.

2. A meeting of the Governing Board shall be chaired by the Chairperson of the Governing Board, and in his/her absence − by the Deputy Chairperson of the Governing Board or another member of the Governing Board designated by the Chairperson of the Governing Board.

3. A member of the Governing Board shall have the right to 1 vote. He/she may not transfer this right to another person. The Governing Board shall have a quorum if more than half of the current members of the Governing Board, but not less than 6 members, attend its meeting. The Governing Board shall adopt a decision by a majority of the votes of the members attending its meeting, except for the case provided for by paragraph 3 of Article 15 of this Law. In the event of an equal division of votes, the vote of the Chairperson of the Governing Board shall be decisive.

4. The Governing Board is entitled to invite any employee of the Pension Fund to its meeting. The said employee shall not have the right to vote when the Governing Board adopts a decision.

5. Other rules and procedures related to the holding of a meeting of the Governing Board shall be determined by the Charter of the Pension Fund.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 11. Selection Commission🔗

1. The Selection Commission shall, in accordance with the procedure established by the legislation of Georgia, select candidates for professional membership of the Governing Board and submit them to the Prime Minister of Georgia. The Selection Commission shall submit to the Prime Minister of Georgia, together with the candidates for professional membership, the recommended conditions for their remuneration.

2. The rules for the selection by the Selection Commission of candidates for professional membership of the Governing Board shall be determined by this Law and a Resolution of the Government of Georgia. The Selection Commission shall select candidates for professional membership of the Governing Board taking into account professional skills and experience, by a majority of its full composition, and shall submit them to the Prime Minister of Georgia in accordance with the procedure established by Article 9 of this Law.

3. The Selection Commission shall have rules of procedure approved by it, which shall establish the rules and procedures for the conduct of its activities.

4. The Selection Commission shall consist of 8 members. The members of the Selection Commission shall be the Minister of Finance of Georgia, the Minister of Economy and Sustainable Development of Georgia, the Minister of Internally Displaced Persons from the Occupied Territories, Labour, Health and Social Protection of Georgia, 3 members of the Parliament of Georgia and 2 independent members.

5. The independent member of the Selection Commission shall be nominated by the National Bank. An employee of the National Bank or a member of the Board of the National Bank may not be an independent member. The independent member shall have at least 10 years of professional experience in the financial sector, including at least 5 years of experience of working in a managerial position in the area of finance, investments and/or risk management.

6. The 3 members of the Parliament of Georgia as members of the Selection Commission shall be nominated by the Parliament of Georgia.

7. The powers of a member of the Selection Commission shall be terminated early upon the termination of his/her official powers. The rule established by this paragraph shall not apply to the independent member of the Selection Commission, whose term of powers and matters of termination of powers shall be determined by the National Bank.

8. The Selection Commission shall have a chairperson, who shall be elected by it by a majority of its full composition. Members of the Selection Commission, except for independent members, shall not be paid remuneration for their activities in the Selection Commission. The payment of remuneration to the independent member of the Selection Commission shall be ensured by the National Bank in accordance with the procedure established by it. The functions of the secretariat of the Selection Commission shall be performed and other material and technical support related to its activities shall be provided by the Pension Fund.

9. The Selection Commission shall be capable of making decisions if at least 5 members of the Selection Commission attend its meeting. The Selection Commission shall make a decision by a majority of its full composition.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 12. Committees of the Pension Fund🔗

1. The Governing Board shall, for the effective performance of special functions, establish the following committees from its professional members with relevant education and experience:

a) Investment Committee;

b) Risk Committee;

c) Audit Committee.

2. The majority of the members of a committee with voting rights shall be members of the Governing Board. A member of a committee may also be the Executive Director of the Pension Fund, an employee, or an invited person. Executive Directors shall not constitute half or more than half of the members of a committee. The requirements of this paragraph shall not apply to the Audit Committee.

3. A committee shall consist of at least 3 members determined in accordance with this Law. The committee shall elect its chairperson from the relevant professional members of the Governing Board. The Executive Director of the Pension Fund may not be elected as chairperson of the committee. The chairperson of the committee shall manage the activities of the committee. A meeting of the committee shall have a quorum if two-thirds of the full composition of the committee are present. The committee shall adopt a decision by a majority of the votes of the members present at its meeting. Members of the Governing Board and Executive Directors shall have the right to vote when the committee adopts a decision.

4. The committee shall be accountable to the Governing Board. The rules and procedures for the establishment and functioning of the committee shall be determined by the Pension Fund's Statute.

5. The majority of the members of the Investment Committee with voting rights shall be professional members of the Governing Board appointed in accordance with the requirements of paragraph 5 of Article 9 of this Law. The Investment Committee shall develop the investment policy document and the procedures for its implementation and submit them to the Governing Board for approval, and shall, in accordance with the criteria established by the Governing Board, select the management company and specialized depositary for the assets defined by Article 28¹ of this Law. The Investment Committee shall, in accordance with the investment policy document, adopt decisions on matters related to investment activities.

6. The majority of the members of the Risk Committee with voting rights shall be professional members of the Governing Board appointed in accordance with the requirements of paragraph 5 of Article 9 of this Law. The Risk Committee shall develop the risk management framework and the procedures for its implementation and submit them to the Governing Board for approval. The Risk Committee shall, in accordance with the risk management framework, adopt decisions on matters related to risk management.

7. The Audit Committee shall be composed of those members of the management board who are not executive directors of the Pension Fund. The Audit Committee is entitled to invite the Head of Internal Audit. The Head of Internal Audit shall not be entitled to participate in the adoption of decisions by the Audit Committee. The Audit Committee shall consider and supervise matters relating to the financial reporting of the Pension Fund, risk management, the internal control system, internal audit activities and audit services, and shall, in accordance with the legislation of Georgia, select an audit firm for the performance of the external audit and submit it to the management board for appointment. The audit firm shall be selected from the world's 4 largest audit firms. A contract with the selected audit firm shall be concluded for a term of not more than 3 years.

8. The Committee shall develop its own charter, which shall determine the mandate of this Committee, the areas of activity and the procedures, which, among other things, include information on regular reporting by the Committee to the management board, cooperation with other committees, restrictions related to membership of the Committee and the functions of the Committee members. The charter of the Committee shall be approved by the management board.

9. Committee members, except for the chairperson of the Committee and invited persons, shall not be paid remuneration for work in the Committee.

10. The management board is entitled, where necessary, to create, in addition to the committees defined by this Article, other committees, the rules for the creation and operation of which shall be determined by the statute of the Pension Fund.

Law of Georgia of 1 November 2023 No. 3601 – website, 20 November 2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12 July 2024.

Article 13. Executive Directors of the Pension Fund🔗

1. The executive directors of the Pension Fund shall constitute the executive body of the Pension Fund, which shall consist of the Director General, the Chief Investment Officer, the Chief Risk Officer and the Head of Internal Audit. The Governing Board shall be entitled, where necessary, to appoint also executive directors of other areas. In this case, the requirements established by this Law for executive directors and, arising from the same Law, the requirements established by the National Bank shall apply to them.

2. The Governing Board shall select the executive directors of the Pension Fund by open competition and shall appoint them to office in agreement with the National Bank, and shall also dismiss executive directors from office after prior notification to the National Bank.

3. The Governing Board shall be entitled, in accordance with the procedure established by paragraph 2 of this Article, to appoint its professional member or any other person to the position of executive director of the Pension Fund. An executive director appointed by the Governing Board may at the same time be a member of a committee of the Pension Fund. An ex officio member of the Governing Board may not be an executive director of the Pension Fund or a member of a committee. The activity of an executive director shall be remunerated activity. If, in accordance with this paragraph, a member of the Governing Board is at the same time an executive director, he/she shall be given appropriate additional remuneration.

4. In the event of the absence of an executive director of the Pension Fund or his/her inability to perform his/her duties, his/her functions shall be performed by the acting executive director (deputy). The procedure for appointing the acting executive director (deputy) of the Pension Fund shall be determined by the statute of the Pension Fund.

5. A person of good faith who has the education and work experience required for this position, including at least 5 years of professional experience of working in a managerial position, may be appointed to the position of executive director of the Pension Fund. The criteria of education and work experience required for the appointment of persons to the positions of executive directors of the Pension Fund, as well as other requirements for their suitability, shall be determined by the National Bank.

6. An executive director of the Pension Fund may not be a person who has been convicted of a grave or especially grave crime, of the financing of terrorism and/or of the legalisation of illegal income or of the commission of another economic crime, as well as a person whose act caused the insolvency or bankruptcy of a financial institution.

7. If, by the time of the expiry of the term of office of an executive director of the Pension Fund, a new executive director has not been appointed, the incumbent executive director of the Pension Fund shall continue to exercise his/her powers until the appointment of a new executive director.

8. The Director General:

a) represents the Pension Fund in relations with third parties and exercises the powers conferred on the Pension Fund by this Law and the Statute of the Pension Fund, including, on behalf of the Pension Fund, concludes contracts and transactions, unless otherwise provided by law;

b) in accordance with this Law and the Statute of the Pension Fund, appoints to and dismisses from positions the employees of the Pension Fund;

c) implements the decisions of the Governing Board;

d) develops the annual budget and the staff list of the Pension Fund and submits them to the Governing Board for approval;

e) in accordance with this Law and the Statute of the Pension Fund, manages the activities of the Pension Fund, within the framework of which it adopts and implements relevant decisions;

f) issues an individual administrative-legal act, in accordance with this Law and the procedure established by the Pension Fund, on the imposition of the obligation to make a pension contribution, a fine and a penalty on a person who has violated the obligation to make a pension contribution, and, on the basis of an individual administrative-legal act that has entered into force, issues a writ of execution for the compulsory enforcement of the decision taken;

g) based on the results of each year, submits to the Parliament of Georgia a report on the activities carried out by the Pension Fund;

h) performs other functions determined by the Statute of the Pension Fund and the legislation of Georgia.

9. The Director General, in order to exercise the powers conferred on him by this Law and the Statute of the Pension Fund, issues legal acts – orders.

10. The Chief Investment Officer, in accordance with this Law, the Statute of the Pension Fund and the investment policy document, implements the investment policy. The Chief Investment Officer is entitled to take, formalize and implement investment decisions, as well as, within the scope of the powers delegated to him in accordance with the Statute of the Pension Fund, to represent the Pension Fund in relations with third parties and to conclude relevant contracts. The investment policy document shall provide for the rules and procedures for the coordination of investment decisions by the Chief Investment Officer with the investment committee.

11. The Chief Risk Officer, in accordance with this Law and the Statute of the Pension Fund and within the scope of the powers delegated to him by the risk committee, manages the risk management of the Pension Fund and performs functions related thereto. The Chief Risk Officer is entitled, for the purpose of performing functions related to risk management, to have access to any information held by the Pension Fund. The Chief Risk Officer is also entitled to receive information from the asset management company, the specialized depositary and other persons providing other services to the Pension Fund about transactions concluded on behalf of the Pension Fund.

12. The Head of Internal Audit, together with the Audit Committee, shall, in accordance with this Law, the Charter of the Audit Committee and the Regulation of the Pension Fund, manage the internal audit activity. This activity shall be carried out independently of all other activities. All documents and records shall be accessible to the Head of Internal Audit, including information on the activities of the employees of the Pension Fund, the executive directors and the members of the governing board.

13. The executive director of the Pension Fund shall be subject to the obligations provided for by the Law of Georgia "On Combating Corruption". The executive director shall also be prohibited from receiving any gift or remuneration, or from taking a loan, from the asset management company, the specialised depositary or persons affiliated with them, or from any other person providing services to the Pension Fund (except for a loan taken on ordinary commercial terms). The executive director shall be obliged to submit, in accordance with the legislation of Georgia, a declaration of the property status of an official.

14. The executive director of the Pension Fund may not, within 6 months after dismissal from office, provide professional services to the asset management company managing the pension assets, or to the specialised depositary. If the executive director, during the said period, is unable to be employed due to the restriction established by this paragraph, he/she shall retain the existing official salary during that period.

15. The executive directors of the Pension Fund shall be accountable to the governing board and the respective committees.

16. In the event of suspension by the National Bank of the signing authority of the executive director of the Pension Fund, this authority shall be exercised by the deputy of the said executive director, and in his/her absence − by another employee of the Pension Fund determined by the governing board who meets the suitability criteria for the respective executive director of the Pension Fund established by the National Bank.

Law of Georgia of 1 November 2023 No. 3601 – website, 20 November 2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12 July 2024.

Article 14. Person with fiduciary duty🔗

1. For the purposes of this Law, persons with fiduciary duty are:

a) members of the governing board;

b) executive directors;

c) the specialized depositary and persons employed by it who have discretionary authority in relation to pension assets;

d) the asset management company (companies) defined by Article 28¹ of this Law and persons employed by it (them) who have discretionary authority in relation to pension assets;

e) the person responsible before the participants in relation to pension assets, who provides investment advice to the pension fund under the relevant contract;

f) any employee of the pension fund who has discretionary authority over investment decisions related to pension assets.

2. For the purposes of subparagraphs "c" and "d" of paragraph 1 of this Article, a person employed by the specialized depositary/asset management company who has the right to directly take a decision in connection with and/or within the scope of the relevant service shall be considered a person with discretionary authority.

Law of Georgia of 30 November 2022 No. 2208 – website, 15.12.2022.

Law of Georgia of 1 December 2022 No. 2286 – website, 15.12.2022.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 15. Remuneration policy🔗

1. The pension fund shall be obliged to have a remuneration policy determined in proportion to the size, nature, scale and complexity of its activities for all persons who effectively manage the funded pension scheme, perform special functions and whose activities have a material impact on the risk profile of the funded pension scheme. Information on the remuneration policy shall be made public annually.

2. When determining the remuneration policy, the following shall be taken into account:

a) the remuneration policy shall be developed and implemented in such a way as to protect the risk profile, objectives, long-term interests and financial stability of the funded pension scheme and to promote the rational/reasonable and effective management of the pension fund;

b) the remuneration policy shall correspond to the long-term, best interests of the participants;

c) the remuneration policy shall include measures aimed at avoiding conflicts of interest;

d) the pension fund shall be obliged to determine the main principles of the remuneration policy and to update them at least once every 3 years;

e) the management and control of the remuneration policy shall be carried out clearly, transparently and effectively.

3. The remuneration policy shall be approved by the governing board by a majority of the votes of those present. Executive directors of the pension fund may not participate in the approval of the remuneration policy.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 15¹. (removed)🔗

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 16. Outsourced services🔗

1. Any activity of the Pension Fund, including a special function, may be transferred in whole or in part to the relevant outsourced service providers, which, in carrying out this activity/performance of the function, shall act on its behalf. The transfer of the investment function shall be carried out in accordance with Article 28¹ of this Law.

2. In the case defined by paragraph 1 of this Article, full responsibility for the performance of any obligation provided for by this Law and the subordinate normative acts issued on its basis shall be borne by the Pension Fund.

3. The transfer of activities or special functions for outsourced services shall not result in:

a) significant deterioration of the quality of the Pension Fund's management system;

b) unjustified increase of operational risks;

c) the National Bank's supervision over the fulfilment by the Pension Fund of the obligations provided for by the legislation of Georgia being carried out with hindrance;

d) deterioration of the provision of services to the participants.

4. In the case of the outsourced services provided for by this Article, the Pension Fund shall be obliged, for the purpose of the proper carrying out/performance of the transferred activities/special functions, to ensure appropriate monitoring of the outsourced service providers for the entire period of their operation.

5. The transfer of activities and special functions shall be carried out on the basis of a written contract concluded between the Pension Fund and the outsourced service provider. This contract shall clearly define the distribution of rights and obligations between the parties.

6. In the case of the transfer of activities related to special functions for outsourced services, the Pension Fund shall be obliged to obtain prior consent from the National Bank in accordance with the procedure established by the National Bank. Any subsequent change concerning the outsourced services provided for by this paragraph shall also be agreed with the National Bank. In the case of the transfer of other activities for outsourced services, the Pension Fund shall be obliged to notify the National Bank thereof within a reasonable time after their transfer.

7. The National Bank shall be entitled at any time to request from the Pension Fund and the outsourced service providers provided for by paragraph 6 of this Article information on the transferred special functions or other activities.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 17. Source of financing of the pension fund's activities, annual budget of the pension fund🔗

1. The source of financing of the pension fund's activities is the participants' pension assets in the form of an annual servicing fee on pension assets, which is expressed as a percentage amount of the pension assets. The pension fund is entitled to determine the periodicity of the payment of this fee.

2. The percentage amount of the annual servicing fee shall be determined in the annual budget of the pension fund.

3. The general director of the pension fund shall, no later than 1 December of each year, submit to the governing board for approval the draft budget of the pension fund for the following year.

4. The amount received by the pension fund from the participants' pension assets in the form of the annual servicing fee on pension assets for the purpose of financing the pension fund's activities may not be pledged, encumbered with rights, have the right of ownership thereto transferred to a third person, or be otherwise alienated in order to satisfy or secure any claim existing against the pension fund. Enforcement proceedings related to the management commission fee provided for by paragraph 7 of Article 38 of this Law (if any) shall be carried out in stages, in such a way as not to hinder the pension fund's activities determined by this Law.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 18. Reporting and accountability of the Pension Fund🔗

1. The Pension Fund shall be obliged, annually, no later than 5 months after the end of the calendar year, to publish on its official website the annual report of the activities carried out by the Pension Fund in the past year. This report shall contain the following information:

a) annual financial statements compliant with international standards, audited by one of the world's 4 largest audit companies, which shall be selected by the audit committee and appointed by the governing board. The selected audit company shall have the opportunity to conduct the audit of the annual financial statements continuously only three times;

b) information on the total absolute returns, broken down by each of the investment portfolios defined by paragraph 3 of Article 27 of this Law, including by asset classes;

c) information on the value and proportion of pension assets invested according to the investment portfolios defined by paragraph 4 of Article 27 of this Law, as well as information on both the target and the actual allocation of asset classes;

d) information on the results of the investment activity of the asset management company, on target indicators and on indicators of deviation from them − separately for financial instruments denominated in national currency and in foreign currency;

e) an account of all other payables, including the commission of the specialized depositary and, in total, fees for other services and financial transactions;

f) other information determined by the Pension Fund's charter and/or by the National Bank.

2. The General Director of the Pension Fund shall be obliged, annually, no later than 5 months after the end of the calendar year, to submit to the Parliament of Georgia, the Government of Georgia and the National Bank a report on the activities carried out by the Pension Fund in the past year.

3. The Pension Fund is entitled to publish other information (including unaudited financial statements) at the periodicity determined by it.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 19. Supervision of the Activities of the Pension Fund🔗

1. The National Bank shall regulate and supervise the activities of the Pension Fund in accordance with this Law and other legal acts, on the basis of foresight and a risk-based approach.

2. Regulation and supervision of the activities of the Pension Fund by the National Bank shall cover at least the following matters:

a) verification of the compliance of the investment policy document prepared by the Pension Fund with the requirements established by this Law and, in accordance with this Law, by the National Bank, and approval of the said document;

b) verification of the compliance of the methodology for developing the asset allocation strategy, of investment decisions and of the procedure for selecting the asset management company defined by Article 28¹ of this Law by the Pension Fund with the minimum requirements established by the National Bank;

c) determination of the compliance of the investment activities of the Pension Fund with the limits defined by the investment policy document;

d) establishment of suitability criteria for the executive directors of the Pension Fund;

e) establishment of the rules related to the operational activities of the Pension Fund;

f) establishment of the investment rules provided for by Article 27 of this Law;

g) establishment of requirements for the preparation and provision of documents/information to participants;

h) establishment of the rules for the transfer of pension assets provided for by this Law;

i) determination of the methodology for calculating the value of pension assets;

j) determination of the methodology for calculating the value of a portfolio unit, of the methodology for calculating the value of an individual pension account and of the principles and standards of record-keeping related to an individual pension account;

k) establishment of requirements for the protection of the rights of participants;

l) establishment of requirements for the recording of pension contributions, payments and fees on individual pension accounts;

m) establishment of requirements for the programmed withdrawal of pension;

n) establishment of minimum requirements for the mechanism for reviewing and resolving claims;

o) approval of the risk management framework and establishment of any other requirements related to risk management.

3. The National Bank shall be entitled to:

a) establish additional regulatory rules for a specialised depositary that provides services to the Pension Fund/asset management company (companies). These rules may concern own capital, staff experience, technical and software support, the maximum price of services or any other matter that the National Bank considers necessary for the enforcement of this Law;

b) request and receive from the Pension Fund, the specialised depositary, the asset management company (companies) and any natural person and legal entity providing services to them any information (including confidential information) necessary for the exercise of the powers provided for by this Law;

c) require and receive from the Pension Fund, the specialized depositary and the asset management company (companies) reporting documentation in the form and at the frequency determined by it;

d) verify the compliance of the procedures and material and technical resources related to the organizational structure, asset management and other activities of the Pension Fund with the minimum requirements related to pension assets, including those necessary for investment activity, established by the National Bank;

e) verify the compliance of the accounting, settlement, administrative and information systems and means of communication with interested parties related to investment activity and other activities with the requirements established by this Law and the National Bank;

f) conduct an on-site inspection of the Pension Fund, the specialized depositary and the asset management company (companies) in accordance with this Law and other legislative and subordinate normative acts of Georgia;

g) in accordance with this Law, establish additional rules and limits in connection with the holding, in the investment portfolios of the Pension Fund and/or the asset management company (companies), of an investment fund (investment funds) carrying out trading on the stock exchange;

h) if, as a result of the inspection, a need is identified and/or a violation is detected, give the Pension Fund and/or the asset management company a binding instruction and/or a public recommendation on the elimination of the existing deficiencies and set a reasonable period for their elimination;

i) in order to protect the interests of participants and ensure the continuity of the Pension Fund's investment activity, on the basis of the relevant contract concluded with the Pension Fund, perform, in full or in part, the functions of the specialized depositary in accordance with the procedure established by it;

j) in the event of a participant exercising the right granted by paragraph 3¹ of Article 27 of this Law, establish for the Pension Fund a mechanism for the redemption of portfolio units, within the framework of which, for each period of their redemption, a restriction on the total number or maximum value of portfolio units subject to redemption shall be imposed, as well as a mechanism for deviation from the price of a portfolio unit calculated on the basis of the net asset value, which will balance the effect that the sale of new portfolio units or the redemption of existing portfolio units has on the net asset value;

k) establish the minimum credit rating of those investment financial instruments denominated in the national currency and foreign currency permitted by Article 27 of this Law, in which pension assets may be invested in accordance with this Law and other legislative and subordinate normative acts of Georgia;

l) assess the qualitative characteristics related to the management system/structure of the Pension Fund;

m) assess the existing and possible risks facing the Pension Fund;

n) assess the Pension Fund's capabilities for identifying, measuring and managing risks;

o) assess the respective charters and activities of the pension fund's committees and, where necessary, establish minimum standards and procedures for the respective committees;

p) assess the statute of the pension fund;

q) in the event of detection of a violation, apply sanctions proportionate to the violation, including, in the event of detection of a significant violation, suspending the executive director of the pension fund's signing authority or dismissing him/her from office. In the event of suspension of the executive director's signing authority, during the respective period that authority shall be exercised by the deputy of the said executive director, and in his/her absence — by another employee of the pension fund determined by the governing board;

r) require the pension fund to develop/approve the necessary policy documents;

s) determine and apply to the pension fund appropriate non-monetary sanctions in the cases determined by it and in accordance with the established procedure.

4. The National Bank shall be obliged to reflect in its annual report the compliance of the pension fund's activities with this Law and the National Bank's requirements.

5. If the National Bank has information on the deterioration or possible deterioration of the financial or organisational condition of a specialised depositary, it shall provide this information in writing to the pension fund, as well as information on the initiation of the process of revocation of the authorisation of the specialised depositary selected by the pension fund in accordance with this Law and of the asset management company determined by Article 28¹ of this Law.

6. The National Bank shall implement a temporary special administration regime, the ground for the commencement of which is a loss of more than 1 per cent of the invested pension assets resulting from the investment of pension assets and related activities, which is not caused by a change in market conditions, the materialisation of credit risk or counterparty-related risk, by the fault of the pension fund and which could not have been foreseen, or the systematic failure to comply with the National Bank's material instructions, or a situation where the pension fund is temporarily unable to perform its functions related to its activities and which provides for the implementation by the National Bank of temporary measures in connection with these activities in order to ensure the continuity of investment activity. The procedure for the implementation and operation of the temporary special administration regime by the National Bank shall be established by the National Bank.

7. The National Bank shall have the right to establish additional rules necessary for the exercise of the powers conferred on it by this Law and for the regulation of the accumulative pension scheme. The National Bank shall exercise other powers determined by this Law.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 20. (Deleted)🔗

Law of Georgia of 1 November 2023 No. 3601 – website, 20 November 2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12 July 2024.

Article 21. Participation in the Accumulative Pension Scheme🔗

1. An employee, except for an employee who, before the entry into force of this Law, has reached 60 years (in the case of a man) or 55 years (in the case of a woman), becomes a participant after the entry into force of this Article upon the making by the employer, on the basis of paragraph 6 of Article 3 of this Law, of the first pension contribution.

2. An employee has the right to refuse participation in the accumulative pension scheme in accordance with this Law.

3. An employee who, before the entry into force of this Law, has reached 60 years (in the case of a man) or 55 years (in the case of a woman), as well as a self-employed person, becomes a participant voluntarily, in accordance with this Law.

4. An employee who, before the entry into force of this Law, has reached 60 years (in the case of a man) or 55 years (in the case of a woman), as well as a self-employed person, becomes a participant after the entry into force of this Article upon the making by him or her of the first pension contribution.

Law of Georgia of 1 November 2023 No. 3601 – website, 20 November 2023.

Article 22. Refusal to participate in the accumulative pension scheme🔗

1. If an employee who reached the age of 40 before the entry into force of this Law does not wish to be a participant, he/she has the right, in accordance with the procedure established by the pension fund, to apply in writing to the pension fund and withdraw from this scheme within 5 months of automatic enrolment, but not earlier than 3 months after enrolment. Otherwise, the employee remains a participant.

2. The employer shall be prohibited from persuading or dissuading the employee in connection with refusal to participate in the accumulative pension scheme, or exerting influence on him/her in any other form.

3. In the event of the employee's refusal to participate in the accumulative pension scheme in accordance with paragraph 1 of this Article:

a) contributions made by the employer in the name of and for the benefit of the employee to the employee's individual pension account, and the investment income related to these contributions, minus the respective expenses, shall be taxed in accordance with the legislation of Georgia and returned to the employee in accordance with the procedure established by the pension fund;

b) contributions made by the employer for the benefit of the employee to his/her individual pension account, and the investment income related to these contributions, minus the respective expenses, shall be returned to the employer or his/her successor in accordance with the procedure established by the pension fund;

c) pension contributions made by the State for the benefit of the employee to his/her individual pension account shall be transferred to the treasury account of the pension fund, and the investment income related to these contributions, minus the respective expenses, shall be transferred to the single account of the State Treasury in accordance with the procedure established by the pension fund.

4. If an employee refuses to participate in the accumulative pension scheme in accordance with paragraph 1 of this Article, he/she has the right to re-join the said scheme at any time in accordance with this Law and the procedure established by the pension fund. In this case, he/she shall be considered as enrolled in the accumulative pension scheme on a mandatory basis.

5. On the basis of the submission of an application, in accordance with the procedure established by the pension fund, by an employee who has joined the accumulative pension scheme in accordance with paragraph 4 of this Article, the making of the first pension contribution shall cause the creation of an information record about him/her in the electronic system, which shall confirm the employee's joining the accumulative pension scheme and shall create the basis for the activation of his/her individual pension account.

Law of Georgia of 1 November 2023 No. 3601 – website, 20 November 2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12 July 2024.

Article 23. Continuity of participation in the accumulative pension scheme🔗

1. A participating employee whose receipt of an amount in the form of wages is temporarily suspended shall temporarily suspend the making of pension contributions. He/she shall resume the making of pension contributions immediately upon the restoration of the receipt of the amount in the form of wages. If the employee ceases to make pension contributions due to the termination of the employment/contractual relationship, leave for pregnancy, childbirth and childcare, leave for the adoption of a newborn, temporary or long-term incapacity for work, or the absence of wages for any reason, the pension assets shall remain in his/her individual pension account in accordance with this Law.

2. A participating self-employed person whose receipt of self-employment income is temporarily suspended shall temporarily suspend the making of pension contributions. The pension assets shall remain in his/her individual pension account in accordance with this Law. The self-employed person shall resume the making of pension contributions immediately upon the restoration of the receipt of self-employment income.

3. (Removed – 1 November 2023, No. 3601).

4. (Removed – 1 November 2023, No. 3601).

Law of Georgia No. 3601 of 1 November 2023 – website, 20 November 2023.

Article 24. Participant's right to pension assets🔗

1. Pension assets, portfolio units, which are reflected in the participant's individual pension account, are his/her property. The participant's right to dispose of the said property shall arise only upon reaching pension age or in other cases provided for by this Law.

2. The participant's/pension recipient's property rights to pension assets/portfolio units may not be pledged, encumbered with rights, the ownership right thereto may not be transferred to a third party, or they may not be otherwise alienated, in order to satisfy or secure any claim existing against the participant, the pension fund, the specialised depositary, the asset management company (companies) or any other person. The pension assets/portfolio units recorded in the participant's/pension recipient's individual pension account shall not be subject to enforcement and may not be included in the bankruptcy estate of the participant/pension recipient, the pension fund, the specialised depositary or the asset management company (companies).

Law of Georgia No. 3601 of 1 November 2023 – website, 20 November 2023.

Law of Georgia No. 4312 of 27 June 2024 – website, 12 July 2024.

Article 25. Individual pension accounts existing in the Pension Fund🔗

1. Pension contributions and portfolio units acquired through pension contributions shall be reflected in the participant's individual pension account.

2. The Pension Fund shall, upon the participant's joining the funded pension scheme, create an individual pension account for the participant and ensure for him/her remote electronic access to information about this account. Other issues related to the creation of an individual pension account, the methodology for calculating the value of a portfolio unit, the methodology for calculating the value of an individual pension account, and the individual pension account shall be determined by the Pension Fund in accordance with the rules established by the National Bank.

3. The value of the individual pension account shall be calculated and information about it shall become accessible to the participant at least once a quarter.

4. (Repealed – 27 June 2024, No. 4312);

5. (Repealed – 1 November 2023, No. 3601).

6. After the participant's withdrawal from the funded pension scheme, after he/she has received the pension and/or pension assets in full, the participant's individual pension account becomes inactive, but is not closed. For the former participant/pension recipient, his/her individual pension account remains accessible.

Law of Georgia No. 3601 of 1 November 2023 – website, 20 November 2023.

Law of Georgia No. 4312 of 27 June 2024 – website, 12 July 2024.

Article 26. Specialized Depositary🔗

1. The Investment Committee shall select a specialized depositary to which it shall assign the obligations to perform the functions defined by paragraph 6 of this Article and other functions provided for by the legislation of Georgia.

2. The Investment Committee shall select the specialized depositary through a competition (except for the case provided for by subparagraph „i“ of paragraph 3 of Article 19 of this Law). The conditions and procedures for holding the competition (including the requirements for preliminary selection of the specialized depositary) shall be determined and approved by the Management Board.

3. A specialized depositary may provide services to more than one person, but it shall keep the pension assets of the pension fund, the operations and records related thereto accounted for and maintained separately from the assets and records of any other person and/or its own assets and records.

4. A legal entity registered in Georgia that provides specialized depositary services to the pension fund shall be licensed and authorized by the National Bank for the purpose of safekeeping pension assets. A legal entity registered outside Georgia that provides specialized depositary services to the pension fund shall be licensed by the relevant regulator of another state, recognized by the National Bank, and also authorized by the National Bank for the purpose of safekeeping pension assets. Such specialized depositary shall be active, no insolvency proceedings shall be pending against it, and it shall meet the requirements of the legislation of the relevant state.

5. A specialized depositary shall not act as an asset management company.

6. Taking into account the requirements of paragraph 12 of this Article, the specialized depositary shall perform the following functions:

a) receives and keeps securities constituting pension assets;

b) receives and keeps copies of settlement documents on transfers and disbursements of funds constituting pension assets;

c) makes records in the relevant accounts of the register of pension assets held with the specialized depositary;

d) provides the pension fund with all necessary information to assist it in fulfilling the obligations provided for it by this Law;

e) ensures compliance of documents on the acquisition and disposal of pension assets with the legislation of Georgia and other requirements established by the pension fund;

f) performs the supervisory obligation in relation to pension assets;

g) performs other functions determined by the National Bank.

7. The specialized depositary contract concluded between the specialized depositary and the pension fund shall provide for at least the following matters:

a) the obligations of the specialized depositary;

b) the time limits and form for the performance of obligations by the specialized depositary;

c) the amount and calculation rules of the remuneration of the specialized depositary;

d) other requirements established by the legislation of Georgia.

8. In the event of revocation of the relevant licence or authorisation/recognition for a specialised depositary, material breach or improper performance of the specialised depositary agreement, or initiation of insolvency proceedings against the specialised depositary, the Pension Fund shall send a notice to the specialised depositary on the termination of the specialised depositary agreement and shall immediately notify the National Bank and the Management Board of its termination.

9. The change of the specialised depositary shall be carried out in a form that ensures continuous provision of the specialised depositary's services to the Pension Fund.

10. In the event of termination of the specialised depositary agreement, the specialised depositary shall transfer the pension assets placed with it and all documents related to the performance of its obligations to the new specialised depositary within the time limits defined by the said agreement or additionally agreed between the parties.

11. Pension assets placed with a specialised depositary in accordance with this Article are not its property, may not be applied for the performance of the obligations of the specialised depositary, and are not part of its assets to which bankruptcy proceedings may extend.

12. If receiving the services of a specialised depositary is otherwise impossible or requires unreasonable effort or expenses, the Management Board is entitled to adopt a decision on purchasing specialised depositary services by concluding an agreement with the National Bank. On the basis of the said agreement, the National Bank may perform all functions of the specialised depositary defined by paragraph 6 of this Article or only a certain part thereof.

Law of Georgia of 19 March 2020 No. 5860 – website, 23.03.2020.

Law of Georgia of 9 February 2023 No. 2551 – website, 27.02.2023.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 16 November 2023 No. 3728 – website, 07.12.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 27. Investment of Pension Assets🔗

1. (Deleted – 27.06.2024, No. 4312).

2. (Deleted – 27.06.2024, No. 4312).

3. The investment of pension assets may be carried out in 3 investment portfolios with different risk levels and expected returns:

a) in a conservative (low-risk) investment portfolio;

b) in a balanced (medium-risk) investment portfolio;

c) in a dynamic (high-risk) investment portfolio.

3¹. A participant/pension recipient has the right to decide for themselves which investment portfolio best suits their risk tolerance. The participant/pension recipient, by an application submitted in accordance with the procedure established by the pension fund, records the decision as to which investment portfolio suits them.

3². If the participant/pension recipient exercises the right conferred by paragraph 3¹ of this Article, the rules provided for by paragraphs 4 and 4¹ of this Article shall not apply to them.

4. If the participant/pension recipient does not exercise the right conferred by paragraph 3¹ of this Article, the investment of pension assets shall be carried out in compliance with the following principles:

a) the investment of pension assets credited/reflected on the participant's/pension recipient's individual pension account before 1 January 2028 shall be carried out in a conservative (low-risk) investment portfolio;

b) pension contributions made to the participant's individual pension account after 1 January 2028, as well as the investment of the pension assets of a participant who joined the funded pension scheme after 1 January 2028, shall be carried out in compliance with the following principles:

b.a) the investment of the pension assets of a participant under 40 years of age shall be carried out in a dynamic (high-risk) investment portfolio;

b.b) the investment of the pension assets of a participant from 40 to 50 years of age shall be carried out in a balanced (medium-risk) investment portfolio;

b.c) the investment of the pension assets of a participant aged 50 or over 50 shall be carried out in a conservative (low-risk) investment portfolio.

4¹. The age of a participant provided for by paragraph 4 of this Article shall be determined as follows: the age of a participant who joined the funded pension scheme before 1 January 2028 – as of 1 January 2028, and the age of a participant who joined after 1 January 2028 – as of the date of joining. At the same time, along with a change in the participant's age, the pension assets credited to their individual pension account shall be transferred to the investment portfolio defined for the corresponding age category by subparagraphs "b.a"–"b.c" of paragraph 4 of this Article. If the participant exercises the right conferred by Article 33 of this Law, the investment of their pension assets, regardless of the participant's age, shall be carried out in a conservative (low-risk) investment portfolio.

5. A participant/pension recipient shall have the right, in accordance with this Law and the rules established by the pension fund, to change the investment portfolio chosen by him/her or the investment portfolio that has been automatically chosen in accordance with paragraphs 4 and 4¹ of this Article and that is managed by the pension fund.

5¹. The rules for the selection and change of the investment portfolio by a participant/pension recipient shall be established by the pension fund. The said rules shall determine various matters, including the frequency of changing the investment portfolio and the time limit for the submission by the participant/pension recipient to the pension fund of the relevant application. The frequency of changing the investment portfolio shall not be less than 12 months, except for individual cases determined by a normative act of the pension fund (if any).

5². The pension fund shall be obliged, 2 years before the participant reaches pension age, to provide the participant electronically with information about his/her investment portfolio, including information on the possibility of changing the investment portfolio after receiving the pension and on the forms of pension withdrawal. The pension fund shall establish the rules and procedures for the payment/assignment of the pension/pension assets to the pension recipient, including, in the context of each investment portfolio, the minimum requirements for liquid assets in accordance with the rules established by the National Bank.

6. The investment committee, taking into account the principles defined by this Article, shall develop an investment policy document, in accordance with which the pension assets shall be invested.

7. The investment policy document, for the purposes of investing pension assets, shall clearly define, in the context of each type of investment portfolio, at least the following matters:

a) investment objectives;

b) the asset allocation strategy and the maximum permissible norms of deviation from the asset allocation strategy for each class of assets;

c) the overall risk profile and the matrix of tolerance towards individual risks, indicating the investment horizon of its application;

d) the procedure for the selection, monitoring and evaluation of the management company, the specialized depositary and other persons providing services related to investment activity, as defined by Article 28 of this Law, and for the conclusion/termination of a contract with them. Investments in each investment portfolio shall be planned on the basis that, by the end of the investment horizon, positive real returns from the investment (taking inflation into account) are expected with high confidence.

8. Each investment portfolio shall provide for a different investment horizon, which shall be determined by the investment committee in accordance with the requirements established by this Law. At the same time:

a) the investment horizon of the conservative (lower-risk) investment portfolio shall not be less than 5 years;

b) the investment horizon of the balanced (medium-risk) investment portfolio shall exceed the investment horizon of the conservative (lower-risk) investment portfolio;

c) The investment horizon of a dynamic (high-risk) investment portfolio shall exceed the investment horizon of a balanced (medium-risk) investment portfolio.

8¹. The Pension Fund is entitled, in accordance with each type of investment portfolio defined by this Article (conservative, balanced, dynamic), to create and offer to participants several conservative (low-risk), balanced (medium-risk) or dynamic (high-risk) investment portfolios that differ from one another.

9. The returns received from the investments made through each investment portfolio and the effectiveness of the investment policy shall be assessed taking into account the term of the investment horizon and the riskiness of the investment portfolio resulting from the investment made.

10. The Management Board determines the rules and periodicity for reviewing the investment policy document. The investment policy document shall be reviewed at least once a year.

11. The Management Board/Investment Committee shall, for the purpose of responding to significant fluctuations in the financial markets or to risks related thereto, consider the need to amend the investment policy document.

12. The types of investment portfolio provided for by paragraph 3 of this Article and the permissible investment limits by broad asset classes shall be determined as follows:

a) Conservative (low-risk) investment portfolio:

a.a) investment financial instruments provided for by subparagraphs "a"–"d1" of paragraph 16 and subparagraphs "a"–"c1" of paragraph 17 of this Article, as well as corporate debt securities placed by way of public offering, provided for by subparagraph "e" of paragraph 16 and subparagraph "d" of paragraph 17 of this Article — up to 100 percent;

a.b) equity securities provided for by subparagraph "f" of paragraph 16 and subparagraph "e" of paragraph 17 of this Article — up to 20 percent;

a.c) other types of assets provided for by paragraphs 16 and 17 of this Article (except for units of an investment fund or sub-fund provided for by paragraph 13¹ of this Article) — up to 15 percent;

a.d) when investing in private equity, venture capital and real estate investment funds provided for by subparagraph "g" of paragraph 16 and subparagraph "f" of paragraph 17 of this Article, these investment funds shall be registered/authorized by the National Bank;

a.e) with respect to the financial instruments provided for by subparagraph "d2" of paragraph 16 and subparagraph "d1" of paragraph 17 of this Article, the National Bank is entitled to establish, by a legal act, a stricter limit than the limit determined by subparagraph "a.c" of this paragraph;

b) Balanced (medium-risk) investment portfolio:

b.a) investment financial instruments provided for by subparagraphs „a“–„d1“ of paragraph 16 of this article and subparagraphs „a“–„c1“ of paragraph 17, as well as corporate debt securities placed by way of public offering, provided for by subparagraph „e“ of paragraph 16 and subparagraph „d“ of paragraph 17 of this article − up to 80 percent;

b.b) equity securities provided for by subparagraph „f“ of paragraph 16 and subparagraph „e“ of paragraph 17 of this article − from 20 percent to 40 percent;

b.c) other types of assets provided for by paragraphs 16 and 17 of this article (except for units of an investment fund or sub-fund provided for by paragraph 13¹ of this article) – up to 20 percent;

c) dynamic (high-risk) investment portfolio:

c.a) investment financial instruments provided for by subparagraphs „a“–„d1“ of paragraph 16 of this article and subparagraphs „a“–„c1“ of paragraph 17, as well as corporate debt securities placed by way of public offering, provided for by subparagraph „e“ of paragraph 16 and subparagraph „d“ of paragraph 17 of this article − up to 60 percent;

c.b) equity securities provided for by subparagraph „f“ of paragraph 16 and subparagraph „e“ of paragraph 17 of this article − from 40 percent to 60 percent;

c.c) other types of assets provided for by paragraphs 16 and 17 of this article (except for units of an investment fund or sub-fund provided for by paragraph 13¹ of this article) − up to 25 percent.

13. The maximum limits for placement in investment financial instruments denominated in foreign currency, by investment portfolio, shall be determined as follows:

a) conservative (low-risk) investment portfolio − 20 percent;

b) balanced (medium-risk) investment portfolio − 40 percent;

c) dynamic (high-risk) investment portfolio − 60 percent.

13¹. For the purposes of paragraphs 12 and 13 of this article, the holding of units of an investment fund or its sub-fund provided for by subparagraph „g“ of paragraph 16 or subparagraph „f“ of paragraph 17 of this article shall be deemed to be holding in an amount proportional to the assets included in the portfolio of the same investment fund/sub-fund, if not less than 95 percent of the respective portfolio consists of the assets provided for by subparagraphs „a“–„d1“, „e“ and „f“ of paragraph 16 and subparagraphs „a“–„d“ and „e“ of paragraph 17 of this article. Additional requirements established by the National Bank in accordance with paragraph 19 of this article shall also apply to the respective assets included in the portfolio of the investment fund/sub-fund determined by this paragraph, unless otherwise provided by a legal act of the National Bank.

14. (deleted – 27.06.2024, No. 4312);

15. The Investment Committee shall approve, for the asset management company defined by Article 28¹ of this Law (if such a company exists), detailed investment guidelines for each type of investment portfolio. They shall include no less than the target return indicators (benchmark), the maximum rate of deviation of risks from the benchmark relative to the target indicators, permitted and prohibited investments, credit risks, the investment horizon, and rating limits in accordance with the investment policy document and this Law.

16. Investment of pension assets may be made in the following investment financial instruments denominated in foreign currency:

a) cash, bank deposits and deposit certificates;

b) government securities;

c) debt securities issued by international financial institutions;

d) securities issued by the state, as well as securities issued by a municipality or a state agency, if they are duly guaranteed by the respective state;

d¹) mortgage-backed bonds issued by commercial banks licensed by the state's banking regulator;

d²) co-investment together with international financial institutions, subject to the conditions determined by the National Bank;

e) corporate debt securities (except for the bonds provided for by subparagraph „d1“ of this paragraph), which are registered by the respective regulator and placed by public or private offering;

f) shares of enterprises or global depositary receipts, which are registered by the respective capital market regulator of the state and placed by public offering and which are traded on a stock exchange, provided that they are subject to ongoing supervision by the respective regulator;

g) units of an investment fund (including an investment fund trading on a stock exchange, a private equity investment fund, a venture capital investment fund, a real estate investment fund) licensed/authorised/registered by the respective state regulator and/or subject to supervision by the respective state regulator;

h) other financial instruments and/or non-financial assets that the National Bank may permit for investment for balanced (medium-risk) and dynamic (high-risk) investment portfolios.

17. Investment of pension assets may be made only in the following investment financial instruments denominated in national currency:

a) cash, bank deposits and deposit certificates;

b) government securities, securities issued by a municipality;

c) debt securities issued by international financial institutions;

c¹) mortgage-backed bonds issued by commercial banks licensed by the National Bank;

d) corporate loan securities (except for the bonds provided for by subparagraph "c1" of this paragraph), which are registered by the respective regulator in Georgia and are placed by public or private offering;

d¹) co-investment together with international financial institutions in compliance with the conditions determined by the National Bank;

e) shares of enterprises which are placed by public offering, are on the list of a stock exchange licensed in Georgia or in another state, and over which continuous supervision is exercised by the respective regulator;

f) units of an investment fund (including a private equity investment fund, a venture capital investment fund, a real estate investment fund) authorized/registered by the National Bank;

g) other financial instruments and/or non-financial assets which the National Bank may allow for investment for balanced (medium-risk) and dynamic (high-risk) investment portfolios.

18. (removed - 01.11.2023, No. 3601).

19. The National Bank is entitled to establish additional requirements (including a minimum permissible credit rating) for any type of investment financial instrument and/or issuer defined by this article.

20. Investment of pension assets is prohibited:

a) in assets the alienation of which is inadmissible by law;

b) in options, futures and forward transactions and other contracts and financial assets related to securities, except for derivatives used within the framework of a hedging strategy for the purpose of reducing risks, which do not increase open positions. The effect of paragraph 2 of Article 24 of this Law does not extend to the said case. The National Bank is entitled to establish additional requirements with respect to the derivatives used within the framework of the hedging strategy provided for by this subparagraph;

c) in private equity securities/units, immovable property and physical assets;

d) in any property of a member of the supervisory board of the management company managing pension assets, or of a person affiliated with him;

e) in securities issued by the management company managing pension assets, or by a person affiliated with it;

f) in other financial instruments and/or non-financial instruments determined by the National Bank.

21. Investment of more than 5 percent of pension assets in investment financial instruments issued by a single issuer is inadmissible. The National Bank is entitled to establish, with respect to an investment fund carrying out trading on a stock exchange and to the issuer of such an investment fund, a rule different from that defined by this paragraph.

22. In respect of the pension assets managed by the pension fund, it is inadmissible:

a) to hold in aggregate more than 20 percent of the investment financial instruments in circulation of a single issuer, or, in accordance with the rule established by the National Bank, to hold not more than 30 percent;

b) co-participation of more than 20 percent within the framework of transactions of international financial institutions provided for by subparagraph „d2“ of paragraph 16 and subparagraph „d1“ of paragraph 17 of this article.

22¹. If the investment portfolio exceeds the limits/requirements defined by this article and this non-compliance is not caused by a new investment decision, the Pension Fund shall, within 6 months, ensure that the investment portfolio complies with the requirements established by this law.

22². When calculating the limits defined by this article, only open (unhedged) positions shall be taken into account.

22³. The limit defined by paragraph 21 of this article shall be calculated in the context of each of the investment portfolios managed by the Pension Fund.

23. The restrictions defined by paragraphs 21 and 22 of this article shall not apply to cash funds, bank deposits, deposit certificates and mortgage-secured bonds, as well as to securities issued by the Government of Georgia, the National Bank or international financial institutions recognised by the Government of Georgia with a credit rating of not less than AA- or its equivalent.

24. Pension assets may not be alienated:

a) to the management company managing those assets which provides services to these pension assets;

b) to a member of the governing board;

c) to any person affiliated with the asset management company or a member of the governing board (where it is possible to identify the affiliation).

24¹. The prohibitions established by subparagraph „d“ of paragraph 20 of this article, paragraph 24 and paragraph 3 of Article 35 of this law shall not apply to a transaction concluded by the Pension Fund/asset management company in securities where the counterparty is a financial institution licensed by the National Bank or by the regulator of another state on behalf of/for the benefit of a beneficiary, and, moreover, based on practices established in the securities market, the identity of this beneficiary is unknown to the Pension Fund/asset management company.

25. The asset management company may not issue any loan or guarantee in favour of a person defined by subparagraph „c“ of paragraph 24 of this article.

26. The Pension Fund/asset management company shall exercise all rights arising from the investment financial instruments it manages in accordance with the interests of the participants and their successors.

Law of Georgia No. 5860 of 19 March 2020 – website, 23.03.2020.

Law of Georgia No. 7008 of 15 July 2020 – website, 28.07.2020.

Law of Georgia No. 3601 of 1 November 2023 – website, 20.11.2023.

Law of Georgia No. 4312 of 27 June 2024 – website, 12.07.2024.

Article 28. (repealed)🔗

Law of Georgia No. 3601 of 1 November 2023 – website, 20.11.2023.

Law of Georgia No. 4312 of 27 June 2024 – website, 12.07.2024.

Article 28¹. Asset management company🔗

1. The Management Board shall be entitled, in compliance with the legislation of Georgia and the criteria and procedures established by it, to adopt a decision on transferring the pension assets defined by this Article to an asset management company for management. In this case, the Pension Fund shall conclude a corresponding contract with the asset management company. Where this authority is exercised, the pension assets may be transferred for investment only in other types of assets.

2. The asset management company shall be obliged to manage the pension assets in accordance with the pension asset management contract and the detailed investment guidelines developed on the basis of the investment policy document approved by the investment committee.

3. An asset management company registered in Georgia shall be a licensed legal entity authorised by the National Bank for the purpose of managing pension assets, shall have continuously carried out activities over the last 3 years, and no insolvency proceedings or licence/authorisation revocation procedures shall be pending against it.

4. For the purposes of this Article, the National Bank shall be entitled to establish additional requirements for an asset management company licensed in Georgia.

5. An asset management company registered outside Georgia shall meet the following requirements:

a) it shall be licensed by the respective regulator of the state where it is registered, and also recognised by the National Bank;

b) it shall have continuously carried out activities over the last 10 years and no insolvency proceedings or licence suspension or revocation procedures shall be pending against it;

c) it shall not be a person affiliated with a member of the Management Board;

d) it shall have at least 3 years' experience in managing accumulated assets of third (private and institutional) parties.

6. The National Bank shall be entitled to establish additional requirements for an asset management company registered outside Georgia.

7. The Management Board shall select one or more asset management companies using transparent selection procedures. The Management Board shall establish the rule and criteria for selecting the asset management company.

8. Pension assets placed with an asset management company in accordance with this Article are not its property, may not be applied to satisfy the obligations of the asset management company, and are not part of its assets over which insolvency procedures may be extended.

9. The provisions of this Article shall be subject to the rules established by Article 16 of this Law.

Law of Georgia No. 4312 of 27 June 2024 – website, 12.07.2024.

Article 29. (repealed)🔗

Law of Georgia No. 4312 of 27 June 2024 – website, 12.07.2024.

Article 30. (removed)🔗

Law of Georgia of 9 February 2023 No. 2551 – website, 27.02.2023

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023

Article 31. Annual reporting to the participant🔗

1. The Pension Fund shall provide the participant, at least once a quarter, with information on the value of the total pension assets held in his/her individual pension account, indicating the dates of making pension contributions and the investment returns. This information may be provided to the participant through the electronic system. The procedure and form for providing the said information to the participant shall be determined by the Pension Fund in accordance with the legislation of Georgia.

2. Upon the participant's request, the Pension Fund shall be obliged to provide the participant with written information on the value of the total pension assets held in his/her individual pension account.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024

Article 32. Granting and payment of pension at pension age🔗

1. After reaching pension age, a participant has the right, in accordance with the procedure established by the Pension Fund, to apply to the Pension Fund and to receive the value corresponding to the total pension assets recorded in his/her individual pension account by way of a lump-sum payment or programmed withdrawal.

2. After reaching pension age, a participant also has the right, in accordance with the procedure established by the Pension Fund, to apply to the Pension Fund and to request the purchase of an insurance annuity product with the pension assets recorded in his/her individual pension account, for the purpose of receiving a pension.

3. The Pension Fund is authorised to determine other forms of payment to the participant of the pension assets recorded in his/her individual pension account in the form of a pension, and to provide the participant with such form.

4. A participant is authorised to receive the full amount of the value of the pension assets from his/her individual pension account if he/she reached pension age not later than 5 years from the date of commencement of pension contributions.

5. The Pension Fund shall establish a threshold for the value of total pension assets, within which a participant has the right to receive a pension by way of a lump-sum payment.

6. A participant shall receive in full the amount corresponding to the pension assets recorded in his/her individual pension account after he/she applies to the Pension Fund in accordance with the procedure established by the Pension Fund, and the Pension Fund adopts the decision provided for by paragraph 15 of this Article.

7. The Director General of the Pension Fund, in agreement with the governing board, shall approve the rules and conditions for determining the periodicity of programmed withdrawal based on statistical data on life expectancy, in accordance with the requirements established by the National Bank, for the purpose of paying out pension assets to those participants who are not entitled to withdraw pension assets in accordance with paragraphs 4 and 5 of this Article.

8. In order to calculate the amount to be paid out by programmed withdrawal, the value of the total pension assets recorded in the participant's individual pension account as at the date of his/her retirement shall be divided by the participant's expected remaining life expectancy, which is based on data of the Legal Entity of Public Law – National Statistics Office of Georgia on the age distribution of the population and life expectancy.

9. The amount to be paid out by programmed withdrawal shall be recalculated annually, in the month in which the participant's age changes. It shall be inadmissible for the payment programme to differ on the basis of the participant's state of health, race, religious belief, sex, nationality or any discriminatory ground.

10. The Pension Fund shall notify the participant of the approaching of his/her pension age through the electronic system 6 months before the onset of that age and shall ensure that the standard application form is accessible to him/her.

11. (repealed – 1 November 2023, No. 3601).

12. (repealed – 1 November 2023, No. 3601).

13. After reaching pension age, a participant has the right, but is not obliged, to claim and receive a pension on the ground of reaching pension age in accordance with the procedure established by the Pension Fund. If, after reaching pension age, a participant does not exercise this right, the employer and the State shall make pension contributions in his/her favour until the participant claims the pension, in accordance with this Law and the procedure established by the Pension Fund.

14. After the commencement of the receipt of a pension, a participant may not continue making pension contributions.

15. The Pension Fund shall take a decision on the award of a pension/pension assets no later than 30 calendar days from the date on which the participant applies to it, in accordance with the procedure established by the Pension Fund, with an application for retirement, and shall commence the issuance/payment of the pension no later than 30 calendar days from the taking of the decision on the award of the pension/pension assets. After the Pension Fund takes a decision on the award of a pension/pension assets, the participant's status changes and he/she becomes a pension recipient.

16. (Removed - 01.11.2023, No. 3601).

17. (Removed - 01.11.2023, No. 3601).

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 33. Award and issuance of a pension in the event of limitation of a participant's ability🔗

1. A participant has the right to receive a pension at any age due to limitation of ability, if he/she is granted the appropriate status in accordance with the legislation of Georgia. In this case, the participant shall receive the pension in one of the forms provided for by paragraphs 1 and 2 of Article 32 of this Law.

2. The Pension Fund shall determine the relevant forms and procedures on the basis of which the participant shall exercise the right conferred by this Article and claim the receipt of the pension before reaching pension age.

3. The Pension Fund shall take a decision on the award of a pension on the ground of limitation of a participant's ability and shall commence the issuance/payment of the pension within the time limit and in accordance with the procedure determined by paragraph 15 of Article 32 of this Law.

4. After leaving the funded pension scheme due to the award of a pension by lump-sum payment on the ground of limitation of ability, the participant has the right to re-join the funded pension scheme at any time in accordance with this Law and the procedure established by the Pension Fund. In this case, he/she shall be deemed to have joined the funded pension scheme on a mandatory basis. At the same time, he/she shall no longer have the right to claim, in accordance with the procedure established by this Law, the award and issuance of a pension on the ground of limitation of ability.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 34. Transfer of pension assets to a participant's heir🔗

1. If a participant dies, the corresponding amount of the pension assets recorded on his/her individual pension account shall be transferred to his/her heir(s) in accordance with the procedure established by this Law and other legislative and subordinate normative acts of Georgia.

2. Pension assets may be transferred to a participant's heir by a lump-sum payment, and if the heir of the deceased participant is a participant — by transfer to his/her individual pension account, in accordance with the heir's choice.

3. A participant's heir shall submit a request to the pension fund in accordance with the rules (procedures) approved by the pension fund.

4. After the pension fund receives from the heir of the deceased participant the request for the transfer of the pension assets to him/her and the documentation confirming the legitimacy of this request in accordance with the procedure established by the pension fund, the pension fund shall, within the period defined by paragraph 15 of Article 32 of this Law, adopt a decision on the transfer of the pension assets to the heir of the deceased participant and shall transfer to the heir the pension assets recorded on the deceased participant's individual pension account in one of the forms provided for by paragraph 2 of this Article, in accordance with the heir's choice.

5. (Removed – 01.11.2023, No. 3601).

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 34¹. Receipt of pension assets by a participant upon permanently leaving Georgia🔗

1. If a participant's Georgian citizenship has been terminated and/or he/she has lost a permanent residence permit in Georgia, he/she has the right to request receipt of the corresponding value of the pension assets recorded on his/her individual pension account by a lump-sum payment. This request shall be satisfied if it is confirmed that the participant is no longer a citizen of Georgia and/or no longer holds a permanent residence permit in Georgia.

2. If a person who has exercised the right provided for by paragraph 1 of this Article has again acquired Georgian citizenship and/or a permanent residence permit in Georgia, pension contributions in the name of and for the benefit of the said person shall be mandatory in accordance with this Law. In the event of re-acquisition of Georgian citizenship and/or a permanent residence permit in Georgia, the participant shall be obliged to notify all his/her employers thereof.

3. The pension fund shall adopt a decision on the issuance, on the ground of the participant's permanently leaving Georgia, of the corresponding value of the pension assets recorded on his/her individual pension account and shall transfer to the participant the value of the pension assets within the period defined by paragraph 15 of Article 32 of this Law. The amount to be transferred to the participant on the ground of his/her permanently leaving Georgia shall be taxed in accordance with the legislation of Georgia.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 35. Breach of fiduciary duty🔗

1. A person with fiduciary duty shall manage pension assets only in accordance with the interests of participants and their heirs, taking into account the requirements established by this Law. Protection of other interests constitutes a breach of fiduciary duty. A person with fiduciary duty, in the performance of duties, shall be obliged to:

a) act in good faith;

b) exercise care as a reasonably prudent person in a similar position and under similar conditions would exercise;

c) act with the belief that his/her action is best for protecting the interests of the owners of pension assets.

2. If a person with fiduciary duty lacks the knowledge and the possibility of conducting expertise necessary for taking any decision, he/she shall seek the opinion of a specialist with appropriate qualification in the relevant field on this matter.

3. A breach of fiduciary duty shall be deemed to be a breach by a person with fiduciary duty, intentionally or by gross negligence, of an obligation provided for by this Article (including the use of pension assets for his/her own benefit or for the benefit of a person affiliated with him/her, or the conclusion of a transaction related to pension assets (except for a transaction concluded on a stock exchange with pension assets by the pension fund or the asset management company within the scope of investment activity) whose other party is a person affiliated with the person with fiduciary duty).

4. A breach of fiduciary duty shall not be deemed to be an act of a person with fiduciary duty which he/she performed in the process of conducting investment activity in compliance with the requirements established by this Article, regardless of the result that occurred. Also, the failure by the employer and the State to make a pension contribution in the name of/for the benefit of an employee shall not be deemed to be a breach of fiduciary duty by a person with fiduciary duty.

5. For breach of fiduciary duty, a person shall bear the liability determined by the legislation of Georgia.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 36. Consequences of breach of fiduciary duty🔗

1. The pension fund may demand from a person with fiduciary duty compensation for damage caused by breach of fiduciary duty.

2. Compensation for damage caused by breach of fiduciary duty shall be regulated by the legislation of Georgia.

3. Amounts recovered as a result of compensation for damage caused by breach of fiduciary duty shall be credited to the individual pension account of the respective participant or his/her heir, in proportion to the damage caused by the breach of fiduciary duty.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 37. Interference by the employer in the process of the employee's joining the accumulative pension scheme and violation of the employer's obligation to make a pension contribution🔗

1. Interference by the employer in the process of the employee's joining the accumulative pension scheme constitutes a violation of this Law.

2. Violation (non-fulfilment and/or improper fulfilment) by the employer of the obligation to make a pension contribution, non-making of a pension contribution by the employee in accordance with this Law as provided for by subparagraph „d“ of paragraph 6 of Article 3 of this Law, as well as, in the case provided for by subparagraph „d“ of paragraph 6 of Article 3 of this Law, non-reimbursement by the employer to the employee of the pension contribution constitutes a violation of this Law and shall entail the imposition of administrative liability.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Article 37¹. Consideration and resolution of participants' claims🔗

1. A participant has the right to apply to the pension fund with a claim.

2. The statute of the pension fund shall determine the mechanism for the consideration and resolution of participants' claims by the pension fund.

3. The National Bank is entitled to establish minimum requirements for the mechanism of consideration and resolution of participants' claims by the pension fund.

4. The time limit for the consideration by the pension fund of a participant's claim and the adoption of the relevant decision shall not exceed 30 calendar days.

5. A participant is entitled to apply to a court at any time for the protection of his/her rights.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 38. Transitional Provisions🔗

1. The Government of Georgia shall ensure, by 15 August 2018, the approval of the statute of the Legal Entity of Public Law − Pension Agency.

2. The Supervisory Board shall ensure, by 15 September 2018, the appointment to the position of Director of the Legal Entity of Public Law − Pension Agency in accordance with the procedure established by this Law.

3. The National Bank shall ensure, by 1 December 2018, the adoption of the legal acts provided for by this Law.

4. The Legal Entity of Public Law − Pension Agency shall ensure, by 1 December 2018, the adoption of the legal acts provided for by this Law.

5. Before the election of the chairperson of the Investment Board, the Supervisory Board is competent with a composition of 3 members.

6. The first chairperson of the Supervisory Board shall be elected by the Government of Georgia.

7. The commission for the management of the Pension Fund shall not exceed 0.50 percent of the pension assets.

8. The Parliament of Georgia shall elect 2 members of the first composition of the Investment Board provided for by paragraph 1 of Article 12 of this Law for a term of 3 years.

9. Within 5 years from the entry into force of this Law, the investment of pension assets shall be carried out only in a low-risk investment portfolio.

9¹. The Legal Entity of Public Law − Pension Agency shall ensure, by 1 September 2024, the compliance of the balanced (medium-risk) investment portfolio with subparagraph „b“ of paragraph 12 of Article 27 of this Law, as well as the compliance of the dynamic (high-risk) investment portfolio with subparagraph „c“ of paragraph 12 of Article 27 of this Law.

10. Within 5 years from the entry into force of this Law, the limit for investing pension assets in securities issued by a single issuer (except cash funds and bank deposits) specified in paragraph 21 of Article 27 of this Law is 15 percent.

11. The activity of the selection commission shall be financed in the first year from the State Budget of Georgia.

12. Within 9 months from the entry into force of this Law, the Ministry of Finance of Georgia shall submit to the Government of Georgia a package of legislative amendments related to the indexation of the state pension, which shall ensure the maintenance of the replacement coefficient.

13. The Government of Georgia shall determine the procedure for ensuring the fulfilment in 2019 of the obligation, provided for by this Law under the accumulative pension scheme, in the part of the funding to be contributed by the State into this scheme, as well as, in the case of employees in budgetary organizations, the co-financing to be contributed by the employer.

14. The Pension Agency shall ensure, before the entry into force of Article 7¹ of this Law, the elaboration and approval of the procedure provided for by paragraph 6 of Article 7¹ of this Law.

15. A person who, before 1 May 2025, violated the obligation to make pension contributions provided for by this Law, including violated the deadline, but fully fulfils this obligation no later than the commencement of the inspection thereof by the Pension Agency, shall not be subject to a fine in accordance with this Law.

16. A person who, before 1 May 2025, violated the obligation to make a pension contribution provided for by this Law, including violated the deadline, but who will fully perform this obligation no later than the commencement of his/her audit by the Pension Fund, shall not be imposed a fine in accordance with this Law.

17. For the period before 1 May 2025, an employee shall be deemed to have voluntarily joined the funded pension scheme from the oldest-dated pension contribution made by his/her employer, and where there are several employers, the date of the employee's joining the funded pension scheme shall be determined in relation to each employer, from the oldest-dated pension contribution made by the respective employer. If any employer has not made a pension contribution, the date of origin of the obligation to make a pension contribution for that employer shall be the period of making the first pension contribution in the name of and for the benefit of the respective employee.

18. Before 1 May 2025, it shall be inadmissible, in terms of the pension assets managed by the Pension Agency:

a) holding, in aggregate, more than 20 per cent of the investment financial instruments in circulation of one issuer, or, in accordance with the rule established by the National Bank, holding more than no more than 30 per cent;

b) co-participation of more than 20 per cent within the framework of transactions of international financial institutions provided for by subparagraph „d2“ of paragraph 16 of Article 27 of this Law and subparagraph „d1“ of paragraph 17.

19. If, before 1 May 2025, the investment portfolio exceeds the limits/requirements defined by Article 27 of this Law and this non-compliance is not caused by a new investment decision, the Pension Agency shall be obliged to ensure, within 6 months, the compliance of the investment portfolio with the requirements established by this Law.

20. Before 1 May 2025, the Pension Agency shall not require from persons, including the heirs of a deceased participant, who, before 30 September 2024, in accordance with the procedure established by law, fully received a pension/pension assets, the return of the amount erroneously/excessively paid to them as a result of an excess pension contribution.

Law of Georgia of 1 November 2023 No. 3601 – website, 20.11.2023.

Law of Georgia of 27 June 2024 No. 4312 – website, 12.07.2024.

Article 39. Entry into force of the Law🔗

1. This Law, except for Articles 7, 21 and 29 of this Law, shall enter into force upon publication.

2. Articles 7 and 21 of this Law shall enter into force from 1 January 2019.

3. Article 29 of this Law shall enter into force from 1 January 2021.

President of Georgia Giorgi Margvelashvili

Kutaisi,

2¹ July 2018

No. 3303-rs