In some countries, citizens are given the opportunity to use their pension savings not only after reaching retirement age but also earlier (for the repayment of mortgage loans, education expenses, or other social needs - ed.). Although this approach creates flexibility in the social security system, the economic realities of each country affect the implementation of such mechanisms differently.
So, is it possible to use pension capital prematurely in Azerbaijan as well?
Medianews.az reports that economist Asif Ibrahimov, speaking to Konkret.az on the subject, stated that although this practice is applied in some countries, Azerbaijan's current pension system is not suitable for it.
"In the country, pension payments are mainly formed from compulsory social insurance contributions paid by working citizens. These funds both create future pension capital and are directed towards the support of current pensioners.
Under the current conditions, the accumulated funds are insufficient to fully cover pension payments, and additional financial support is allocated annually from the state budget. This indicates that the system is already operating under a certain burden."
According to Asif Ibrahimov, if citizens were given the opportunity to withdraw pension capital prematurely, this could seriously impact the financial stability of the State Social Protection Fund:
"Such a step would lead to a reduction in the fund's resources and, consequently, difficulties in pension payments. As people use these funds for mortgages and other purposes, the balance in the system would be disrupted."
According to him, allowing premature use of pension capital does not seem realistic in the near future. The expert believes that under current conditions, the main priority is to maintain the sustainability of the existing pension system and ensure financial stability.