YEREVAN, September 14. / ARKA /. Shifting to so-called mandatory accumulative pension system from 2014 will give a strong boost to the securities market, labor and social security minister Artem Asatryan said today.
Under the reform plan approved by the government years ago, Armenia was to switch to the new system in January 2010 whereby the amount of monthly benefits paid to retired citizens will depend on their and their employers' contributions to the fund. The existing pay-as-you-go system essentially does not differentiate between pensioners' employment histories.
The State Social Security Service already keeps track of social security contributions of all officially registered workers. Each of them has had a personal pension account and social security number since 2005.
"The reform, as the international experience shows, will contribute to the development of the securities market, as the pension fund will invest the money in securities,” the minister said on the sidelines of a conference on decent work and pensions organized, as part of USAID program to help Armenia reform its pension system and the labor market. The conference was attended by the chairman of the State Revenue Committee Gagik Khachatryan, U.S. Ambassador to Armenia John Heffern, the head of USAID mission to Armenia Karen Hilliard, representatives of the Central Bank and other interested stakeholders.
The minister said since the passage of the law o pass to new pension system in 2010, the government and the Central Bank have developed dozens of secondary legislation in order to secure the reform. Asatryan also said that concurrently the Central Bank and the Finance Ministry are developing measures to enhance the activities of companies, managing financial market assets and involve in this process other organizations.
"For the first stage it would be better to have the securities market offer wider instruments so that pension funds had more investment opportunities. But, I think, gradually, the market will develop,” a deputy finance minister Vardan Aramian said.
The reform will apply to all ciztiens under 40, who will have to contribute 5 percent of their monthly salaries to their pension account
and another 5 percent, but no more than 25,000 drams, will be contributed by their employers.
According to government data, Armenia’s officially registered workforce numbering some 460,000 people is already outnumbered by 520,000 pensioners, hampering a further sizable growth in pensions.-0-