FACTORS DETERMINING THE EFFECTIVENESS OF PENSION SYSTEM REFORMS IN GEORGIA

Natia Kakhniashvili E-mail: [email protected] Doctor of Business Administration Iv. Javakhishvili Tbilisi State University Tbilisi, Georgia https://orcid.org/0009-0004-0759-198X Khatuna Barbakadze E-mail: [email protected] Candidate of Economic Sciences Iv. Javakhishvili Tbilisi State University Tbilisi, Georgia https://orcid.org/0009-0001-1670-8463 Nato Kakashvili E-mail: [email protected] Candidate of Economic Sciences Iv. Javakhishvili Tbilisi State University Tbilisi, Georgia https://orcid.org/0009-0005-1399-1784 Abstract. Pension policy is a critical component of a state's social policy. Current global trends, particularly those associated with population aging, have heightened the need for effective pension system reforms. The stability and efficiency of pension systems are vital elements of a society's social welfare infrastructure, ensuring financial support for retirees and promoting their well-being in old age. However, pension systems face significant challenges due to demographic shifts, economic fluctuations, and evolving societal expectations. Traditional pension systems often struggle to fully meet the needs of retirees, and many existing schemes experience substantial volatility, jeopardizing their long-term sustainability. As a result, the need for pension system reform has become increasingly urgent. To address these challenges, states must implement more comprehensive reforms aimed at effectively modernizing their pension systems. Pension reform refers to the process by which a government or employer makes substantial changes to the structure, policies, and regulations governing pension benefits. Successful reforms typically require thorough analysis, consultation with stakeholders, and legislative action to ensure effective implementation. The pension system of Georgia has undergone several important stages of reform in recent decades. After gaining independence, the country implemented socio-economic transformations, which were accompanied by demographic aging and shifts in labor market dynamics. These changes underscored the need for reforms in the pension system. The pension system faces several significant challenges. Foremost among these is the demographic trend of an aging population coupled with a declining birth rate, which poses a serious threat to the long-term sustainability of the system. Additionally, the expanding informal labor market and high unemployment levels further complicate the situation, creating obstacles that could undermine the stability of pension benefits for future retirees. Addressing these fiscal challenges requires the implementation of innovative policies that ensure adequate retirement income for citizens while maintaining the system's viability. The reform of the pension system requires the joint participation of the government and society. The government should strengthen supervision and management, create an effective management and supervision mechanism of the pension system. Pension system reform is complex. Different countries have different levels of economic development, demographic structure, social security system, etc. Key words: pension system, reform, efficiency, risks, modernization. JEL classification: H 55, J1