AmCham backs life insurers as key players in Azerbaijan's private pension system

Life insurance companies should play a leading role in the development of non-state pension funds in Azerbaijan, the American Chamber of Commerce in Azerbaijan (AmCham) said in its White Paper 2025.

According to Report, the document says that in developed economies, private pension funds operate alongside state systems, improving retirement benefits and easing fiscal pressure on public budgets.

AmCham said expanding the private pension system would broaden access to higher-quality retirement products and help turn private funds into a significant part of the financial market, accelerating capital market development and fostering a more resilient investment environment.

The White Paper 2025 notes that a draft law to establish a non-state pension system has been prepared, aimed at both improving social protection and supporting capital market growth. Its implementation is expected to enhance the efficiency of the pension system and boost public trust in pension funds.

The document also highlights the importance of government support, including tax incentives and financial stimuli, to encourage participation in private pension schemes, while calling for further analysis of the scale and mechanisms of such incentives.

AmCham experts said drafting legislation on private pension funds requires a comprehensive review of the entire pension system. At the initial stage, they suggest introducing a second-pillar pension scheme - a state-funded or funded system - and considering mechanisms for mandatory contributions.