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ARMENIAN OPPOSITION DEPLORES "UNTIMELY" PENSION REFORM
By Gohar Abrahamyan
ArmeniaNow
14.09.12 | 13:44
Armenian lawmakers continue the discussions of changes in the
pension system, with the ongoing reform drawing strong criticism from
opposition factions that consider it premature.
During the debate in the National Assembly on Thursday representatives
of minority parties suggested that instead of spurring the country's
economic development the reform in the form it is proposed now will
only provide an additional source of income for commercial banks.
Two years ago, still the parliament of the previous convocation passed
a raft of laws envisaging drastic changes in the pension sphere by
which an accumulative retirement plan will become mandatory beginning
2014 for all citizens of Armenia aged below 40. It will be optional
for citizens above this age.
The reform means that all working citizens of the indicated age
on a compulsory basis will have to save up their future pensions
themselves, getting five percent of their monthly salaries deducted
and transferred to an individual account at one of several pension
funds licensed by the state, with the government doubling the sum of
the transferred money. Pension money will become available to people
when they reach official retirement age, which is 63 in Armenia now,
or under some other circumstances involving their disability or moving
out of the country.
Specialists say the new system will contribute to the reduction of the
untaxed segment on the labor market and will encourage employees to
demand that their employers show their real wage rate in tax reports,
as this way they will ensure they have more money transferred to
their individual pension accounts with expectations of higher pensions
after retirement.
"The goal of the new pension system is that the state becomes
responsible for the social state of the society," Deputy Minister
of Finance Vardan Aramyan explained in parliament. He added that the
model to be introduced in Armenia is close to the one used in Estonia
and that all possible risks have been explored and minimized.
According to the government official, the accumulative pension system
will be transparent and taxpayers will be able to follow their funds.
The accumulated money could be administered earlier, such as if the
account holder moves to another country for permanent residence or
loses his or her ability to work.
Meanwhile, opposition lawmakers are critical of the government plans to
introduce the system in Armenia at this stage of economic development
when many citizens still have to live off their meager salaries.
Artsvik Minasyan, a lawmaker representing the Armenian Revolutionary
Federation (Dashnaktsutyun), said that the step will entail the
"privatization" of the pension system, while accumulative pension
funds will not be able to solve the problems that exist in the social
welfare system.
Former Prime Minister Hrant Bagratyan, who is a member of the
opposition Armenian National Congress faction in parliament, voiced
an opinion that the introduction of the accumulative pension system
will only benefit commercial banks.
"With the introduction of this system it will be impossible to ensure
real economic growth, besides it will also reduce the role of state
and social pensions, pension accumulative funds will not work,"
concluded Bagratyan, suggesting that the government rethink the
"untimely" reform.
By Gohar Abrahamyan
ArmeniaNow
14.09.12 | 13:44
Armenian lawmakers continue the discussions of changes in the
pension system, with the ongoing reform drawing strong criticism from
opposition factions that consider it premature.
During the debate in the National Assembly on Thursday representatives
of minority parties suggested that instead of spurring the country's
economic development the reform in the form it is proposed now will
only provide an additional source of income for commercial banks.
Two years ago, still the parliament of the previous convocation passed
a raft of laws envisaging drastic changes in the pension sphere by
which an accumulative retirement plan will become mandatory beginning
2014 for all citizens of Armenia aged below 40. It will be optional
for citizens above this age.
The reform means that all working citizens of the indicated age
on a compulsory basis will have to save up their future pensions
themselves, getting five percent of their monthly salaries deducted
and transferred to an individual account at one of several pension
funds licensed by the state, with the government doubling the sum of
the transferred money. Pension money will become available to people
when they reach official retirement age, which is 63 in Armenia now,
or under some other circumstances involving their disability or moving
out of the country.
Specialists say the new system will contribute to the reduction of the
untaxed segment on the labor market and will encourage employees to
demand that their employers show their real wage rate in tax reports,
as this way they will ensure they have more money transferred to
their individual pension accounts with expectations of higher pensions
after retirement.
"The goal of the new pension system is that the state becomes
responsible for the social state of the society," Deputy Minister
of Finance Vardan Aramyan explained in parliament. He added that the
model to be introduced in Armenia is close to the one used in Estonia
and that all possible risks have been explored and minimized.
According to the government official, the accumulative pension system
will be transparent and taxpayers will be able to follow their funds.
The accumulated money could be administered earlier, such as if the
account holder moves to another country for permanent residence or
loses his or her ability to work.
Meanwhile, opposition lawmakers are critical of the government plans to
introduce the system in Armenia at this stage of economic development
when many citizens still have to live off their meager salaries.
Artsvik Minasyan, a lawmaker representing the Armenian Revolutionary
Federation (Dashnaktsutyun), said that the step will entail the
"privatization" of the pension system, while accumulative pension
funds will not be able to solve the problems that exist in the social
welfare system.
Former Prime Minister Hrant Bagratyan, who is a member of the
opposition Armenian National Congress faction in parliament, voiced
an opinion that the introduction of the accumulative pension system
will only benefit commercial banks.
"With the introduction of this system it will be impossible to ensure
real economic growth, besides it will also reduce the role of state
and social pensions, pension accumulative funds will not work,"
concluded Bagratyan, suggesting that the government rethink the
"untimely" reform.