# State Social Protection Fund (Azerbaijan)

The State Social Protection Fund (SSPF) of Azerbaijan Republic (Azerbaijani: Azərbaycan Respublikası Dövlət Sosial Müdafiə Fondu) is a governmental agency within the Cabinet of Azerbaijan in charge of regulating activities in the sector of social insurance and provision of pensions to citizens of Azerbaijan Republic.

## History

Throughout the Soviet rule, the social insurance and pensions to citizens in Azerbaijan were provided by the state. The Soviet system of pensions was based on no contribution principle with employed citizens not directly contributing to any funds, and the state issuing pensions directly from the state budget or state organizations. In 1990, the Soviet Social Insurance Fund was founded and all enterprises, establishments, organizations, cooperatives, state farms, collective farms and other organizations in the country had to make contributions to this fund. In 1991, by the decree of the Cabinet of Ministers of Azerbaijan SSR, Social Insurance Fund of Azerbaijan SSR was established.
After restoration of independence of Azerbaijan in the second half of 1991, the Azerbaijani branch of the Soviet Pension Fund was transformed into the Pension Fund of Azerbaijan by the Presidential Decree dated December 16, 1991. On June 1, 1992, the National Assembly of Azerbaijan passed a law "On the normative allocations for the Social Insurance and Employment Fund", according to which the social insurance contributions would make 40% of the gross payroll. The Pension Fund was to receive 85% of that amount, while the remaining 15% went to the Social Insurance Fund.
To improve and modernize the social security system in the country, on September 30, 1992, President Abulfaz Elchibey issued a decree abolishing the Pension Fund and the Social Insurance Fund, and establishing the State Social Protection Fund in their place. Laws on social insurance and pension reforms in 1997 and 2001 further improved the social security system putting it in line with international standards.
On August 4, 2003, another Presidential Decree "On measures for improving the state pension system in Azerbaijan Republic", the functions of the Ministry of Labor and Social Protection of Population of Azerbaijan Republic on providing, financing and control over payments of pensions and additional benefits were passed to the State Social Protection Fund. Due to reforms related to the single insurance–pension system in the country through 2006, the servicemen of the Azerbaijan Armed Forces and persons with special ranks became covered by the mandatory social insurance.

## Structure

The fund is headed by Chairman and a Deputy who are appointed by the President of Azerbaijan Republic.
It has a board of seven directors, which include chairman, two deputies, the chairman of Nakhchivan Autonomous Republic of Azerbaijan, head of the central office of the fund, head of finance and budget department and the director of the department of the fund for work with the military personnel and persons with special ranks.

## Duties of SSPF

Main functions of the agency are working out proposals on state policies in the field of social insurance and labor pensions; preparation of draft budget of the fund and ensure control over the approved budget; ensuring collection of mandatory state social insurance contributions from all entities and individuals engaged in work activity; enforcing control over implementation of legislative requirements in the process of mandatory social insurance; issuing pensions from the fund's budget; issuing benefits for temporary disability, pregnancy and child delivery, childcare limited to periods stipulated in legislation; issuing full or partial payments for spa treatments of the insured; issuing funeral grants, etc.
According to the fund management, its revenue grew by 8.7% in the first half of 2010. The number of individual personal accounts of the insured is 1,732,215. In 2011, 97.2% (AZM 1.916 bn) out of its total expenditures in 2011 will include payments to the population.

## Pension payment system

SSPF carried out a project to introduce new pension and benefits payment system in 2004–2006. The main advantage of the system was to get pensions by plastic cards via ATMs. As a result of implementation of the project people in all cities and the regions of Azerbaijan, even in remote areas, have been provided with plastic cards, and got opportunity to get their pensions and benefits via relevant ATMs.
Approximately 860 thousand persons get their pensions and benefits via ATMs. This forms 80% of the total number of the pensioners.