Irakli Gharibashvili: “Pension was GEL 110 in 2012 and is now GEL 500.”
Verdict: FactCheck concludes that Irakli Gharibashvili’s statement is HALF TRUE.
In 2012, the state pension was GEL 110-125 (for pensioners under the age of 67 it was GEL 110 and for pensioners 67 and over it was GEL 125). According to draft 2024 budget, pensions for people under the age of 70 increases to GEL 315 whilst for those above 70 it will be GEL 415. Only those pensioners who live in highland settlements and are above 70 will have GEL 500 pension.
At first glance, the pension growth seems impressive as the Prime Minister took a 12-year period for comparison. In addition, of note is the fact that currency’s purchasing power decreases in time and, therefore, the real growth of pension (in view of purchasing power) is lower. This means that if we measure the real pension in 2012 prices it will be equal to GEL 186.4 and GEL 245.5, respectively.
Although pensions have increased both in nominal and real value as compared to 2012, the Prime Minister seeks to portray an exaggerated growth. Therefore, FactCheck concludes that Irakli Gharibashvili’s statement is HALF TRUE.
Analysis
On 3 November 2023, at the session of the Government of Georgia, the Prime Minister, Irakli Gharibashvili, stated: “We increased pensions to GEL 500. In 2012, the pension was GEL 110 and it is now GEL 500.”
The amount of pension is differentiated according to age groups and geographical location. According to currently available data, the pension for those under 70 years of age is GEL 295 and the pension for those 70 years and older is GEL 365. Pensioners living in highland settlements receive a pension supplement of 20%. Accordingly, the pension of a person under the age of 70 living in a highland settlement is GEL 354 GEL and for those aged 70 years and over it is GEL 438.
According to the draft 2024 budget, the pension for persons under the age of 70 years of age increases to GEL 315. The pension for people aged 70 years and over was set at GEL 415. In highland settlements, the pension for persons under 70 years of age increases to GEL 380 and to GEL 500 for people over the age of 70 years.
When the Georgian Dream came to power in 2012, the state pension was GEL 110-125 (GEL 110 for pensioners under the age of 67 and GEL 125 for pensioners aged 67 years and older).
Therefore, the pension for persons under the age of 70 increased from GEL 110 GEL to GEL 315 in a 12-year period under the Georgian Dream. The pension of people aged 70 and over increased from GEL 125 to GEL 415. The GEL 500 pension referred to by the Prime Minister will only be available to people aged 70+ living in highland settlements starting from 2024.
When discussing a pension or other income in the long-term, we must take into account that the purchasing power of the currency decreases over time. In other words, GEL 100 can buy less goods and services today than years ago because of inflation. Incomes are divided into nominal and real categories. Nominal income reflects the net amount expressed in a specific monetary unit. Real income is real wealth which is adjusted for inflation.
Table 1 shows the dynamic of both the nominal and the real pension in 2012-2014. As compared to 2012, the real pension has increased in 2024, although obviously not as much as in a nominal figure. In fact, pensioners aged 70 years and over will be able to purchase the same amount of products with the GEL 415 pension that was possible in 2012 with GEL 245.5. The pension of a person under 70 years of age will be equal to GEL 186.4 if measured in 2012 prices. Therefore, the real pension increased nearly 1.7 times for people under the age of 70 and 1.9 times for people over the age of 70 in 2024 as compared to 2012.
Table 1: Nominal and Real Pension in GEL in 2012-2024 (2012=100) [1]
Source: National Statistics Office of Georgia, author’s calculations
Therefore, the Prime Minister seeks to demonstrate exaggerated figures of pension growth. The GEL 500 pension to which the Prime Minister referred will only be available to those pensioners who live in highland settlements and are 70 years of age and over. In 2012-2024, pension for people under 70 increased from GEL 110 to GEL 315 whilst it increased from GEL 125 to GEL 415 for those people aged 70 and over. In real figures; that is, considering money’s purchasing power, this growth is even less. In addition, we should take into account that the Prime Minister speaks about a lengthy 12-year period. Naturally, the larger the period we take for comparison and, what is more, compare nominal figures, the growth will be even more “impressive” which distorts the real picture. Therefore, FactCheck concludes that Irakli Gharibashvili’s statement is HALF TRUE.
[1] The following figures have been used for calculation of real data: the average annual inflation rate of 2012-2022, the average inflation rate of the past 10 months of 2023 and the target inflation rate in the case of 2024.
