Almost half of Azerbaijan's population does not live to retirement age

JAMnews

Baku

Average life expectancy has fallen in Azerbaijan

According to statistics, approximately 40% of Azerbaijanis die before they reach retirement age. Among men, this figure is 47%. At the same time, according to the pension legislation, the issuance of old-age pensions is designed for a twelve-year period. According to expert Togrul Mashalli, if the laws are brought in line with real statistics, pension payments could increase significantly.

Average life expectancy has fallen by three years

Over the past two years, average life expectancy in Azerbaijan has fallen by three years.

According to the State Statistical Committee (SSC), by the end of 2021 the average life expectancy in the country was 73.6 years. In 2019, according to official statistics, on average each resident of Azerbaijan lived 76.4 years.

Women in Azerbaijan live on average 76 years, while men live only 71 years. Thus, on average, women outlive men by five years.

According to experts, life expectancy has fallen over the past two years due to a sharp increase in morbidity, especially infectious diseases.

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Almost half of Azeris do not live to see retirement

Official statistics reveal that 76,878 people died in Azerbaijan in 2021. Of these, 30, 544 people (40%) are under 65.

Among men, 47 in 100 deaths were under 65. Among women, 32% do not live to see their retirement.

Worldwide average life expectancy is 75 years. Azerbaijan lags behind by 1.4 years.

What about the pension?

Old-age pensions in Azerbaijan consist of two parts: basic and insurance. The basic part of the pension is established by decree of the President of the country. The insurance part is calculated by dividing the amount collected in the personal account of a citizen during their working years by 144 (12×12). In other words, the state assumes that, on average, labor pensioners live twelve years after retirement.

According to President Ilham Aliyev’s latest decree to increase the minimum pension, the base labor pension is AZN 240 [approximately $141].

For a clear example of calculating the insurance part of a pension, let’s take an average Azerbaijani who has worked 40 years before retirement with an average salary. Over 40 years (480 months), he could put 48,000 manats [approximately $28,200] from his salary into a pension fund.

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If we divide this amount by 144 months, we get 333 manats [approximately $195] per month. Thus, the hypothetical pensioner will receive a monthly pension of AZN 573 (240 + 333) [approximately $337].

Men retire at the age of 65 in Azerbaijan. The retirement age for women in July 2026 will also be brought up to 65 years. It thus turns out that the average Azerbaijani citizen receives a pension of only 8.6 years, and not 12 years, as the state assumes.

And if the same insurance part of the pension is divided by 8.6 years, then the size of the pension would increase by 132 manats [approximately $78].

Expert comment

Can citizens of Azerbaijan, taking the above into account, arbitrarily dispose of the insurance part of the pension? With this question, we turned to economics expert Togrul Mashalli.

According to Mashalli, unlike some Western countries, in Azerbaijan a person cannot withdraw on the insurance part of the pension:

“In some countries, people who have lost hope for a long life can freely withdraw from the pension fund the entire sum insured of their old-age pension and do whatever they want with it. In Azerbaijan this is impossible.

“If a citizen does not live up to retirement age, the insurance sum, according to the latest changes in pension legislation, is divided in equal parts among their heirs. But they do not receive this amount immediately: it is only distributed among the accounts of the heirs in the pension fund.

“Suppose a father dies before reaching retirement; he leaves behind a wife and three children. in this case, the insurance part of his pension is divided into four parts and each part is added to the insurance part of the heirs’ pension. They will receive this amount as an addition to their pension.

“If a person is single and has no heirs, then the insurance part of their pension goes to the budget of the pension fund,” Mashalli said.

Average life expectancy has fallen in Azerbaijan