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Defined pension contribution system to drive local companies out of shadow
YEREVAN, August 27. /ARKA/. Introduction of the defined pension
contribution system will oust local companies and their employees from
shadow, Karen Tamazyan, chief of Armenian Finance Ministry's unit on
financial markets, said Friday at a news conference.
The new system will be put in force in 2011.
The reforms being implemented now include multi-stage transition to a
new pension system consisting of two key components - state unfunded
pension scheme and private multi-stage financial defined
contributions.
The second component implies monthly social pay to be transferred by
citizens to special funds until they reach retirement age.
They will transfer 5% of their monthly salary and another 5% will be
invested by the government.
The accumulated funds will be invested in securities - government
bonds and stocks of organizations, including foreign companies.
`I hope that introduction of the new defined pension contribution
system will drive companies and their employees from shadow, since the
reforms make it beneficial for employees to show their real salaries,'
Tamazyan said explaining that those having higher salaries would
transfer higher social pays to funds, and this amount would be doubled
by the government.
He is convinced that the new system will ensure transparency in
payroll accounting.
The finance ministry's official also said that the new pension system
would form funds, which would be invested in various organizations,
including banks.
As a result, so-called long money will be formed for investment in
long-term economic programs.
This will also ease debt burden and drive deposit interest rates down,
since banks will no longer face cash shortage and deposit attraction
problems.
`Companies will have option - to borrow money or to issue own stocks
for attracting funds,' Tamazyan said.
He finds the new system just, since retirees will receive the pensions
they have accumulated while working instead of the money earned by the
next generation.
According to the latest statistical reports, Armenia has 521,300
pensioners, whose average pension mounts to AMD 24,570 (more than
$67.3).-0---
From: A. Papazian
YEREVAN, August 27. /ARKA/. Introduction of the defined pension
contribution system will oust local companies and their employees from
shadow, Karen Tamazyan, chief of Armenian Finance Ministry's unit on
financial markets, said Friday at a news conference.
The new system will be put in force in 2011.
The reforms being implemented now include multi-stage transition to a
new pension system consisting of two key components - state unfunded
pension scheme and private multi-stage financial defined
contributions.
The second component implies monthly social pay to be transferred by
citizens to special funds until they reach retirement age.
They will transfer 5% of their monthly salary and another 5% will be
invested by the government.
The accumulated funds will be invested in securities - government
bonds and stocks of organizations, including foreign companies.
`I hope that introduction of the new defined pension contribution
system will drive companies and their employees from shadow, since the
reforms make it beneficial for employees to show their real salaries,'
Tamazyan said explaining that those having higher salaries would
transfer higher social pays to funds, and this amount would be doubled
by the government.
He is convinced that the new system will ensure transparency in
payroll accounting.
The finance ministry's official also said that the new pension system
would form funds, which would be invested in various organizations,
including banks.
As a result, so-called long money will be formed for investment in
long-term economic programs.
This will also ease debt burden and drive deposit interest rates down,
since banks will no longer face cash shortage and deposit attraction
problems.
`Companies will have option - to borrow money or to issue own stocks
for attracting funds,' Tamazyan said.
He finds the new system just, since retirees will receive the pensions
they have accumulated while working instead of the money earned by the
next generation.
According to the latest statistical reports, Armenia has 521,300
pensioners, whose average pension mounts to AMD 24,570 (more than
$67.3).-0---
From: A. Papazian