February 21, 2014 - 16:23 AMT
PanARMENIAN.Net - Prime Minister Tigran Sargsyan addressed public concerns over the recently enacted cumulative pension reform.
At the 3rd annual international pension forum, the official characterized the lack of trust as the main problem, the opponents of the reform being unsure that the 5% monthly salary deductions to be saved as retirement sums will be available at the actual time of the retirement.
The Prime Minister noted the concerns above as objective ones, stating that the reforms took 3 years to be readied, with enough time to prepare for their adequate implementation. “During those 3 years, the government amassed funds for pension increase, effective from January 1, 2014 as well as provided AMD 20 billion of budget money to double the citizens’ pension payments.
In reply to opponents' arguments suggesting that the sums might be dissipated, the official said that the means amassed must be diversified through safe and high-rated loan securities issued in different states. “For 80 years since the worldwide implementation of cumulative pension system, no such fund went bankrupt,” he said, noting that the best expertise on the issue was used in implementation of the reform.
He further called to digress off the beaten path to make progress possible. "The reform will promote economic growth and help develop new way of thinking in Armenia. It will be hard, but we must weather the hardships to succeed," Panorama.am quoted the official as saying.
The law that became effective on January 1 obligates all employed citizens under 40 to allocate 5% of their monthly salaries to cumulative accounts, with the government to add another 5%.
Armenia’s leading opposition parties challenged the legality of the law at the Constitutional Court. On February 4, Armenian parliament voted down suggestion of a year-long delay for introduction of a mandatory cumulative pension law, with 46 votes in favor and 56 against. he suggestion was initiated by the Prosperous Armenia, Armenian National Congress, Heritage and ARFD parliamentary groups.
On January 24, the Constitutional Court suspended the provisions of the law envisaging sanctions for not complying with it at least until March 28 when it is due to proceed with consideration of the matter.
Government agencies, however, have continued to force employers to make deductions from the salaries in favor of the funds, which activists and non-government political forces insist is contempt of the Court’s decision.