Armenian parliament voting on the pension reform. (Source: Azatutyun.am).
YEREVAN (Azatutyun.am) — The National Assembly approved on Wednesday the new Armenian government’s decision to complete an unpopular reform of the country’s pension system, which was launched four years ago.
The new Western-backed system is to cover 280,000 or so Armenian workers born after 1973. It requires them to earn most of their future pensions with monthly financial contributions to one of two private pension funds operating in Armenia. Both funds are owned by European companies.
The former government, which embarked on the pension reform in January 2014, said that the existing mechanism for retirement benefits is not sustainable because of Armenia’s aging and shrinking population. But it decided to make the new system optional for private sector employees until July 2018 in response to angry street protests.
Prime Minister Nikol Pashinyan defended the reform when he presented his newly formed cabinet’s policy program to the parliament earlier this month. But in a major concession to Armenians affected by it, the cabinet approved on June 11 a bill that would temporarily cut their pension tax rate from 5 percent to 2.5 percent.
The move prompted Labor and Social Affairs Minister Mane Tandilyan, who was one of the organizers of the 2014 protests, to step down. Pashinyan has yet to formally accept her resignation.
Finance Minister Atom Janjughazyan presented the bill to the National Assembly on Tuesday. He insisted that the effective privatization of the pension system is “the only way to ensure that people get pensions worthy of their work after retirement.â€
