Armenian pension reform should have been linked to pay raise in July – expert

Armenian pension reform should have been linked to pay raise in July – expert

YEREVAN, February 18. /ARKA/. Introduction of the mandatory funded pension system should have been linked to the expected public servant pay raise in July, said professor Ashot Tavadyan, head of mathematical modeling chair, State Economic University of Armenia.

Under the new pension plan that came into effect on January 1, 2014, all Armenian citizens born after January 1, 1974 will have to transfer five percent of their nominal salaries to their personal retirement savings fund, and another 5%, but no more than AMD 25,00 or $61 (300,000 drams or $740 for entrepreneurs), will be added by the government.

“The problem of “long money” is really solved, but this should have been linked to pay raise and should have been done in July when salaries will be increased by 40%”, Tavadyan said in his interview to ARKA.

Earlier, Armenia’s premier Tigran Sargsyan said pensions will be raised by 15% as from January 1 and public servant salaries by 40% as from July 1.

Tavadyan said there is an unfavorable number of pensioners to number of employees ratio in Armenia today, and the reform will provide funds for ensuring proper living standards for pensioners not only from budget.

The expert noted polls need to be conducted before making decisions on issues of public interest to make amendments if required.

The mandatory component of the new pension scheme has triggered public discontent. Representatives of political parties and non-governmental organizations do not believe increased pension tax will help ensure a fair pension and urge the authorities to give up the idea.
On January 24, the Armenian Constitutional Court suspended the enforcement of the new pension system and is now considering the matter. –0--

10:47 18.02.2014

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