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ARMENBROK: BY KEEPING SILENCE PENSION FUNDS TRAMPLE INTERESTS OF FUTURE PENSIONERS IN ARMENIA
by Elita Babayan
Friday, January 24, 17:35
The silence of the pension funds empowered to manage the pension assets
runs counter to the future pensioners' interests, Aram Kayfajyan, CEO
at Armenbrok Investment Company, has told ArmInfo when commenting on
the fact that most citizens are unaware of the important components
of the accumulative pension system.
"We are seriously concerned with the silence of the pension funds.
Many expect them to be active, to appear in the mass media and to
provide detailed information of their strategic plans. This behavior
of the funds can be explained either by their indifference to the
small Armenian market or by the lack of skilled personnel in the
country. I think the presence of foreign specialists, i.e. analysts
and senior managers, would enhance public confidence in these funds",
says Kayfajyan.
According to Kayfajyan, both funds are nevertheless the leading players
in the European market of trust management of retirement savings and
manage rather big assets. This causes confidence in their activity.
The expert has cleared up numerous future pensioners' fears concerning
possible disappearance of the pension assets. "Most fears expressed by
those against the accumulative system are hypothetic and only two of
them have an economic basis, particularly, the high level of pension
contributions (5%) and possible perturbations in the economy such as
default or hyperinflation. "The latter is linked with the long-term
effect of the pension reform. Theoretically, it is possible, because
the economic situation of any country may considerably change within
the next 20-30 years amid regular crises", says the expert. However,
he stresses that Armenia, which has accumulated a big foreign debt,
faces no prospect of default.
Concerning the size of pension contributions, Kayfajyan says that
in some developing countries it is quite low. In some countries it
changes depending on economic conditions.
Almost 7,000 people gathered in Liberty Square on Jan 19 to express
their protest against the compulsory accumulative pension system. They
marched to the building of the Constitutional Court and demanded
that the court revoke the law that imposes the system. The court is
to decide on Saturday, Jan 25.
The voluntary accumulative pension system was introduced in Armenia
on Jan 1 2011. The system will become compulsory starting Jan 1 2014.
According to the bill, the minimal pension in the country will be
equal to the minimum wage, while the basic pension will total 150%
of the minimum wage. The compulsory accumulative pension system will
apply to the citizens born after Jan 1 1974 (the citizens below 40).
Starting Jan 1 2014, 5% of their salaries will be transferred to
their personal accumulative accounts. The government will transfer
a similar amount (but no more than 25,000 drams). It is noteworthy
that 6.6%-13% and not 5% of the monthly wages will be charged, as
the charges will be made from the so-called "brutto-salary." On 15
November the Republican Party boycotted the extraordinary meeting
of the Parliament over the issue. Later on 21 November, an action of
protest was held in front of the Government against the pension reform.
Starting from Feb 2014 pension assets in Armenia will be managed by
Amundi from France (subsidiary of Societe Generale (20%) and Credit
Agricole (80%)) and C-Quadrat from Germany. During the first year
the assets will make up $100mln. Amundi's assets total $1.3tln,
C-Quadrat's assets $500bln.
http://www.arminfo.am/index.cfm?objectid=C6D41CC0-8504-11E3-A2DB0EB7C0D21663
by Elita Babayan
Friday, January 24, 17:35
The silence of the pension funds empowered to manage the pension assets
runs counter to the future pensioners' interests, Aram Kayfajyan, CEO
at Armenbrok Investment Company, has told ArmInfo when commenting on
the fact that most citizens are unaware of the important components
of the accumulative pension system.
"We are seriously concerned with the silence of the pension funds.
Many expect them to be active, to appear in the mass media and to
provide detailed information of their strategic plans. This behavior
of the funds can be explained either by their indifference to the
small Armenian market or by the lack of skilled personnel in the
country. I think the presence of foreign specialists, i.e. analysts
and senior managers, would enhance public confidence in these funds",
says Kayfajyan.
According to Kayfajyan, both funds are nevertheless the leading players
in the European market of trust management of retirement savings and
manage rather big assets. This causes confidence in their activity.
The expert has cleared up numerous future pensioners' fears concerning
possible disappearance of the pension assets. "Most fears expressed by
those against the accumulative system are hypothetic and only two of
them have an economic basis, particularly, the high level of pension
contributions (5%) and possible perturbations in the economy such as
default or hyperinflation. "The latter is linked with the long-term
effect of the pension reform. Theoretically, it is possible, because
the economic situation of any country may considerably change within
the next 20-30 years amid regular crises", says the expert. However,
he stresses that Armenia, which has accumulated a big foreign debt,
faces no prospect of default.
Concerning the size of pension contributions, Kayfajyan says that
in some developing countries it is quite low. In some countries it
changes depending on economic conditions.
Almost 7,000 people gathered in Liberty Square on Jan 19 to express
their protest against the compulsory accumulative pension system. They
marched to the building of the Constitutional Court and demanded
that the court revoke the law that imposes the system. The court is
to decide on Saturday, Jan 25.
The voluntary accumulative pension system was introduced in Armenia
on Jan 1 2011. The system will become compulsory starting Jan 1 2014.
According to the bill, the minimal pension in the country will be
equal to the minimum wage, while the basic pension will total 150%
of the minimum wage. The compulsory accumulative pension system will
apply to the citizens born after Jan 1 1974 (the citizens below 40).
Starting Jan 1 2014, 5% of their salaries will be transferred to
their personal accumulative accounts. The government will transfer
a similar amount (but no more than 25,000 drams). It is noteworthy
that 6.6%-13% and not 5% of the monthly wages will be charged, as
the charges will be made from the so-called "brutto-salary." On 15
November the Republican Party boycotted the extraordinary meeting
of the Parliament over the issue. Later on 21 November, an action of
protest was held in front of the Government against the pension reform.
Starting from Feb 2014 pension assets in Armenia will be managed by
Amundi from France (subsidiary of Societe Generale (20%) and Credit
Agricole (80%)) and C-Quadrat from Germany. During the first year
the assets will make up $100mln. Amundi's assets total $1.3tln,
C-Quadrat's assets $500bln.
http://www.arminfo.am/index.cfm?objectid=C6D41CC0-8504-11E3-A2DB0EB7C0D21663