The formation date of today’s State Social Protection Fund of Azerbaijan Republic is directly connected to the economic relations in our country, as well as to 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 the 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 31^st December, 1991 “On the normative allocations for the Social Insurance and Employment Fund” dated 1^st 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 30^th 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 17^th 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 27^th November, 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 4^th 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 22^nd 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.

“Administration of the pension system in the country will be assembled in the newly created executive body. This body will be conducting operations on the collection of the pension contributions, development and introduction of the individual accounts system, control over the granting and payment of pensions, collection of the detailed statistical information about changes in the levels of income and pension expenditure”.

(from “The Concept of Pension Reform in Azerbaijan Republic ”
approved by the order of the President of Azerbaijan Republic dated 17th July 2001 )