On 26 November 2014, at the plenary session of the Parliament of Georgia, the Chairman of the Healthcare and Social Issues Committee of the Parliament, Dimitri Khundadze, elaborated on the growth of pensions. He said that the growth rate of pensions during the office of the current government is similar to that of the previous government. “For a comparison, the growth rate of pensions during the office of the previous government was as follows: GEL 4 in 2004, GEL 10 in 2005, GEL 10 in 2006, GEL 10 again in 2009, the pensions did not increase in 2010, GEL 20 was the growth in 2011, GEL 10 in 2012 and GEL 25 for some pensioners. During the first three years we increased pensions by GEL 35, GEL 50 and even GEL 60 for certain groups,” said Mr Khundadze.FactCheck
took interest in the growth rate of pensions and verified the accuracy of Dimitri Khundadze’s statement.The Social Service Agency provided FactCheck
with statistics on the amount of pensions by year. Pensions were not increased only in 2010 and 2014 in the period from 2005 to 2015. The amount of pensions equalled GEL 14 in 2004 whilst it amounted to GEL 110 or GEL 125 for certain group of pensioners in 2012. The pensions increased to GEL 125 for all pensioners in April 2013 and to GEL 150 in September 2013. The pensions did not increase in 2014 whilst they will grow by GEL 10 after September 2015.
In order to analyse the growth rate of pensions, we calculated their growth in percentage as follows:
Amount of Pensions and Growth Rate in % from 2004 to 2015
It should be noted that from 2007 to 2012, pensioners received a pension supplement from GEL 2 to GEL 10 according to their work experience.
The growth rate of pensions was quite high from 2005 to 2013. During the office of the current government, pensions saw a significant rise only in 2013. However, the pension growth with the same amount was also included in the 2013 budget plan of the previous government.
Dimitri Khundadze said that the zero growth of pensions in 2014 and the GEL 10 growth in 2015 are similar to the record of the previous government. The zero growth of the pensions during the previous government was observed in 2010; however, pensions increased by 25% (GEL 20) in 2011. In addition, it should also be taken into account that the growth of social spending can only happen in terms of the growth of the economy. Georgia’s economic growth was equal to -3.7% in 2009 (due to the war between Russia and Georgia and the world economic crisis). It is only natural that these factors played a significant role when planning the 2010 budget.
Pensions increased by GEL 10 from 2006 to 2009; however, when talking about the growth of pensions, one also needs to take into account the rate of inflation. The purchasing power of GEL 10 was by far greater from 2006 to 2009 than it will be in September 2015. The purchasing power of GEL 10 in 2006 was equal to GEL 15 by current prices whilst the pension growth of GEL 10 in 2009 would be equal to a pension growth of GEL 12.5 today.
The purchasing power of GEL reduced by 7.2% after September 2013 (the most recent increase of pensions) and taking into account the current inflation rate, it will have reduced at least by 10% by September 2015. This means that the 6.7% growth of the pensions (from GEL 150 to GEL 160) will be neutralised by inflation. In other words, a pensioner was able to buy more goods and services with GEL 150 in September 2013 than he/she will be able to do with GEL 160 in September 2015.
The statistics used by Mr Khundadze in his statement almost entirely match the actual statistics of pension growth from 2004 to 2015. However, the context of the statement that the growth rate of pensions is at least similar to that during the office of the previous government is not accurate.
Pensions increased by GEL 25-40 to GEL 150 in 2013. However, the pension growth with the same amount was also included in the 2013 budget plan of the previous government.
Pensions have not increased in 2014 whilst they will grow by GEL 10 (6.7%) in 2015. The amount of pension has been increasing in accordance with economic growth and the subsequent growth of social spending, from 2005 to 2013. The pension growth was not included in the 2010 budget due to the recession in 2009. However, Georgia’s economy got back on track soon after and the zero growth in pensions in 2010 increased to 25% in 2011.
A GEL 10 increase of pensions was observed in 2006 and 2009; however, given the current rate of inflation, the purchasing power of GEL 10 will be much smaller in September 2015 than it was in 2006 or 2009. In addition, the real amount of pension (inflation included) will be reduced in 2015 as compared to 2013.FactCheck concludes that Dimitri Khundadze’s statement is MOSTLY FALSE.