STATE SOCIAL PROTECTION FUND OF THE AZERBAIJAN REPUBLIC

  • The stages of development
  • The administrative structure of SSPF
  • The duties of SSPF
  • The rights of SSPF
  • International cooperation
  • The Concept of the pension reform
  • Address of SSPF

    The stages of development

    The formation date of today's State Social Protection Fund of Azerbaijan Republic is directly connected with the economic relations in our country, as well as with the dynamics of the fundamental changes in the social insurance and provision of pensions.

    As known, during the USSR period the social insurance and pension issues in Azerbaijan developed not in the framework of the legislation of an independent republic, but in the framework of the all-union legislation.

    The Soviet pension provision system was arranged by the “insurance without contribution” principle. Necessary financial resources were drawn only from the state budget or the payments from organizations.

    The financial model of this type of pension provision, as well as the regular increase in the number of pensioners had a negative impact on a steady functioning of the existent pension system. Changes in the forms of economy in the eighties, transition of most of the organizations to self-supporting management and self-financing was complicating the future provision of the employees working there.

    In 1990, the USSR Social Insurance Fund was founded and all enterprises, establishments, organizations, cooperatives, state farms, collective farms and other organizations irrespective of their subordination were obliged to make contributions to its account. After that, by the resolution of the Cabinet of Ministers of Azerbaijan SSR and the Azerbaijan Republic Council of Trade Unions “On improving the administration and the rules of financing the social insurance in Azerbaijan SSR” (08.05.1991) the Social Insurance Fund of Azerbaijan SSR attached to the Azerbaijan Republic Council of the Trade Unions was founded.

    By the resolution of the Council of Ministers of USSR “On the establishment of the USSR Pension Fund” (15.08.1990) the USSR Pension Fund for financing the provision of pensions was formed and the Azerbaijani branch of the USSR Pension Fund was established. The resolution “On the rules of expenditure of resources of the USSR Pension Fund, payment of contributions to the USSR Pension Fund and accounting of the insurance contributions” formalized by the USSR Pension Fund charged the Pension Fund together with the USSR Social Insurance Fund with the task of collecting the insurance contributions.

    After announcing the Constitutional act on restoring the state independence of the people of Azerbaijan, re-formation of the state establishments of the republic began. By the decree of the President of Azerbaijan Republic (16.12.1991) the Azerbaijani branch of USSR Pension Fund was transformed into the Pension Fund of Azerbaijan Republic.

    By the Law of Azerbaijan Republic “On supplements and amendments to some articles of the Law of Azerbaijan Republic dated 31st December, 1991 “On the normative allocations for the Social Insurance and Employment Fund” dated 1st June, 1992 the social insurance allocations were defined as constituting 40% of the gross payroll. 85% of the mentioned amount was directed to the Pension Fund of the Republic, and 15 % to the Social Insurance Fund.

    With the aim of improving administration in the area of financing the provision of pensions and social insurance, by the Decree of the President of Azerbaijan Republic dated 30th September, 1992 “On the establishment of the State Social Protection Fund of Azerbaijan Republic” on the basis of the Pension Fund of Azerbaijan Republic and the Social Insurance Fund of Azerbaijan Republic, the State Social Protection Fund of Azerbaijan Republic (SSPF) was established. Having independent finance–bank system SSPF was commissioned with the financing of pensions, benefit and payment expenses as its fundamental duty.

    In 1997 in connection with effectiveness of the Law of Azerbaijan Republic “On social insurance” the activities of the State Social Protection Fund were further improved as those of the body carrying out state administration in the area of mandatory state social insurance.

    The measures taken during 2001–2005 with the aim of fulfilling “The Concept of Pension Reform in Azerbaijan Republic” approved by the order of the President of Azerbaijan Republic dated 17th July, 2001 intended for the complete formation of the social insurance and provision of pension issues in the country according to European standards conditioned the qualitative reconstruction of the State Social Protection Fund activities.

    Since November 27, 2001 in connection with the effectiveness of the Law of Azerbaijan Republic “On individual accounts in the system of the state social insurance”, the Fund has been operating as the central executive body carrying out individual accounting in the state social insurance system.

    For the purpose of fulfilling the provisions of the Concept, by the Decree of the President of Azerbaijan Republic #908 dated 4th August, 2003 “On measures for improving the state pension system in Azerbaijan Republic” the functions of the Ministry of Labor and Social Protection of the Population of Azerbaijan Republic on granting, financing and control over payments of pensions and supplemental benefits were passed to the State Social Protection Fund of Azerbaijan Republic which carried out administration in the area of individual accounting and mandatory state social insurance. In that way the functioning of the new insurance-pension body provided for under the Reform Concept was organized.

    In connection with establishment of a single insurance–pension system in the country, on the basis of the decrees #498 and #499 dated 22nd December, 2006 signed by the President of Azerbaijan Republic, the military servicemen and persons with special ranks became covered by the mandatory social insurance and provided by labor pensions through the State Social Protection Fund. Based on this, a number of changes were made in the Statute of the Fund. The preparation of proposals on the directions of the state policy in the area of labor pensions and the realization of this policy were included into the main duties of the Fund.

    Administrative structure of SSPF

    SSPF is directed by Chairman appointed by the President of Azerbaijan Republic. The Chairman of SSPF has one Deputy who is as well appointed by the President of Azerbaijan Republic.

    I. The central office of SSPF is comprised of the following 11 departments and 2 divisions. In addition there is also a joint Azerbaijani Government/UNDP “Capacity Building for the State Social Protection Fund of Azerbaijan Republic” project.

    1. Insurance-pension policy and strategic researches Department
    2. Finance and Budget Department
    3. Labour pensions Department
    4. Legal Department
    5. Internal Audit Department
    6. Personal Accounts Department
    7. Information Technologies Department
    8. Personnel and Personnel Training Department
    9. Budget Implementation Department
    10. Department for work with pension documents and applications
    11. General Service Department
    12. International Relations Division
    13. Division of General Secretariat

    II. Regional Office in the Nakhchivan Autonomous Republic

    III. Department for work with large insurers

    IV. Baku Department for work with small and medium legal entities

    V. Department for work with military personnel and persons with special ranks

    VI. 76 local branches

    As a result of improvement of administrative structure of central office and local branches a management mechanism for effective and flexible performance of the set objectives has been established.

    The duties of SSPF

    The duties of SSPF are:

    Rights of SSPF

    To carry out its duties and functions SSPF has the following rights:

    International Cooperation

    Through extension of international relations SSPF lays great weight on benefiting from and introduction in its work the best practices of the world's social insurance and pension funds.

    Promoting relations with other countries' social insurance and pension funds SSPF intensively conducts an information and experience interchange. This interchange is aimed at the study of world developments in the area of collecting social insurance contributions, innovations in pension coverage, pension reforms under implementation, emerging difficulties and ways of solution, introduction of recent ICT achievements in the social security system, distinct and modern ways of handling the management problems and many others. Besides, SSPF collaborates with the representatives of international donor organizations such as United Nations Development Program, World Bank, European Bank for Reconstruction and Development, Asian Development Bank, International Monetary Fund and others.

    At the 88th Meeting of the International Social Security Association (ISSA) held on May 6-7th, 2004 in Geneva the State Social Protection Fund of the Azerbaijan Republic became an affiliate member of the Association. During ISSA’s 28th General Assembly held on 12-18 of September, 2004 in Beijing (China), the chairman of SSPF was elected a Bureau member of this organization.

    At present the Association with headquarters in Geneva has 370 affiliate and associative members from 150 countries.

    On the 2nd of November, 2006 the membership of the State Social Protection Fund with the International Pension and Social Funds Association was legalized.

    During the first World Social Security Forum that was held in Moscow on 10-15 of September, 2007, the State Social Protection Fund was elected a member of a Steering Committee for the new ISSA European Network.

    The Concept of the pension reform Main objectives and principles of the pension reform

    With the aim of ensuring decent standard of living and social security of the citizens the pension reform is intended to provide a solution to the following problems:

    In order to achieve the main objectives shown above and find a solution to the problems faced, it is planned to carry out the pension reform in accordance with the following principles:

    Administration of the pension system

    In the medium-range prospect, the policy of the pension reform should be directed towards the organization of the three-type pension provision system. The first type of the pension provision implies labor pensions comprising the mandatory state insurance system. The following fundamental requirements should be set for the labor pension reform:

    The second type of the pension provision system is intended to provide social assistance to those not covered by the first type or those not receiving labor pensions. The first two types serve the purpose of carrying out the social protection of the elderly, disabled and survivors.

    The third type of the pension provision system is non-governmental pensions. It is intended to form and develop the non-governmental pension system under the state supervision.

    Application of modern pension payment system

    One of the most successful undertakings in the reforming of the insurance-pension system was the introduction of plastic cards in pension payments. As a result, the Fund succeeded in application of the modern technologies in practice and eliminated longstanding problems and deficiencies in the delivery of pensions.

    In 2004-2006 in the cities and regions of Azerbaijan Republic a project on introduction of a new pension and benefits payment system by plastic cards via ATMs was successfully implemented. Today the coverage of the system is being extended.

    With this aim the local branches of the State Social Protection Fund took measures to instruct the population, advertising films were demonstrated on TV, purposeful activities to ensure payments to the population in this system were undertaken.

    Currently about 860 000 persons receive their pensions and benefits through ATMs and pos-terminals, that constitutes 80% of the total number of the pensioners.

    At the same time, people residing in villages and remote areas apply on their own initiative for getting their pensions and benefits by plastic cards.

    Address of SSPF

    80, Zardabi ave. AZ-1122, Baku, Azerbaijan
    Tel: +(994 12) 434 60 18
    Fax: +(994 12) 434 55 87
    E-mail: sspf@sspf.gov.az
    Web-site: www.sspf.gov.az
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