BAKU, Azerbaijan - Azerbaijan’s parliament approved changes to pension indexation and retirement benefits in a third reading on Oct. 16, with the new system scheduled to take effect on Jan. 1, 2027.
Under the legislation, the portion of a pension up to the country’s average monthly salary would receive full indexation. Only the amount above that threshold would be indexed using a coefficient ranging from 0.2 to 0.5, according to APA.
The average monthly salary stood at 1,176.7 manats as of Aug. 1, 2026. That figure illustrates how the formula would work but is not a permanently fixed threshold. Officials said more than 90% of pensions do not exceed the average salary and would therefore continue to receive full indexation.
A related measure changes the share of mandatory social-insurance contributions credited to an individual insurance account from 90% to 85%. The maximum share allocated to administration of the system would rise from 2.5% to 3%, APA reported. The change concerns how contributions are distributed within the system, not the contribution rate withheld from wages.
The package also restructures pensions for civil servants and military personnel around accumulated pension capital plus a fixed monthly supplement. Future increases in active-service salaries or military pay would no longer automatically determine those pensions, according to APA reports on civil servants and military personnel.
Military eligibility would include reaching the maximum peacetime service age with at least 25 years of military service, or 30 years of total service including at least 15 military years. Transitional rules allow some personnel who entered service earlier to qualify after 20 years.
Officials said changes to military compensation were expected to produce an average 22.8% increase after taxes and mandatory deductions, APA reported. The figure is an expected average under the new structure, not a uniform increase already paid to every service member.