"Even if the minimum pension increases by 40 manats, no one's pension will increase by more than 18 manats" - Reason

From February 1, 2025, the minimum labor pension in Azerbaijan will be increased to 320 manats.
Yeniavaz.com reports that the minimum labor pension is currently 280 manats.
I wonder what consequences the increase in the minimum labor pension by 40 manats or 14.3% will have on pensioners?
Expert economist Allahverdi Aydin, who gave a statement on this issue to the Yeniavaz.com website, says that the increase in the minimum labor pension will mostly affect those who are on an old-age labor pension in 2024 and who receive a minimum pension:
"As we know, pensions are indexed at the beginning of each year depending on the increase in the average monthly salary for the previous year. That is, the higher the salary, the higher the pension. It is expected that by the end of this year, the indexation will be at the level of 8%. This means that from January 1, the minimum pension of 280 manats will be higher than 302 manats. The fact that the minimum pension is 320 manats will lead to an increase in the pension of these people by about 18 manats. It can be said that even if the minimum labor pension is not increased to 320 manats, no one will receive a pension lower than 302 manats. Although the minimum pension will be increased by 40 manats, no one's pension will increase by more than 18 manats. There is no official information on how many people will be affected by the increase of 18 manats. In the first half of this year, 7.6 thousand people retired. If this number of people retire in the second half of the year, then approximately 14-15 thousand people will retire this year. Most likely, very few of them will receive the minimum pension".
Allahverdi Aydin says that if the minimum labor pension is increased before indexation, that is, on January 1, then there may be a greater increase in labor pensions:
"First, if the minimum pension is increased, the pension of 280-manat pensioners will be 320 manats. Later, if this amount is indexed, the increase will be greater."
The economist claims that the minimum pension of 320 manats will not affect the pension of other people:
"The decision on the minimum labor pension of 280 manats was made at the beginning of 2023. At the beginning of this year, the minimum labor pension remained unchanged. This means that the pension of minimum pensioners in Azerbaijan was indexed last year and increased at the beginning of this year. Last year, the average monthly salary in the country increased by 11.2%. Pensions are also indexed at this level. That is, those who received a pension of 280 manats last year will receive 311 manats from the beginning of this year. As we have already mentioned, in January next year, pensions will again be indexed at the limit of 8%. As a result, the pension of those who retire by the beginning of this year and will receive a minimum pension will be at least 336 manats, which will be higher than the minimum level of 320 manats".
"Another effect of increasing the minimum labor pension in Azerbaijan will be related to pension capital," the economist says, adding that increasing the minimum pension will also lead to an increase in pension capital:
"According to the requirements of the law, persons who have reached retirement age in Azerbaijan must have either 25 years of work experience or a minimum level of pension capital to be able to receive an old-age labor pension. Pension capital is calculated by multiplying the minimum pension amount by 144. Currently, the minimum pension capital for receiving a pension is 40,320 manats. After the minimum pension is 320 manats, that is, after February 1, this requirement will be 46,080 manats".

Elnur Ali