YEREVAN, September 14. /ARKA/. Risks in introduction of accumulative pension system (defined contribution retirement scheme) in Armenia are minimal, USAID Pension and Labor Market Program (PALM) COP Rosa Chiappe said Friday in Yerevan on the sidelines of a conference focused on labor and pensions.
She said that Armenian government has done considerable preparations for introducing the new pension system and is ready for transition to it.
Chiappe said that the process will be controlled by the central bank, and donors, such as USAID, will support the implementation of pension reforms also in the future.
She said that individual risks are minimal as well, since everyone will be able to see own pension account online.
Labor and Social Affairs Minister Artem Asatryan, on his side, said that risks are everywhere, including the present system.
Stressing the importance of risk-managing system, he said that the package has a special risk-management component.
Asatryan also stressed that the new system implies social guarantees and ensures a minimal pension to everybody.
“It means that we are going to add new components to the basic system and major social guarantees, which will allow us to pay higher retirement pensions,” he said.
The minister said that the current pay-as-you-go system financed by the government completely relies on the government budget – about 25% of the budget is earmarked for paying pensions every year, and neither citizens nor the government happy about that.
He said that the package of reforms implies introduction of retirement pension system financed fr om several sources.
“The retirement pension should be formed not only from tax revenue, but also personal money of citizens, additional payments from the government budget and anticipated additional income from management of these funds,” Asatryan said.
The conference was held as part of USAID Pension and Labor Market Program. Labor and Social Affairs Minister Artem Asatryan, Deputy Finance Minister Vardan Aramyan, State Revenue Committee Chairman Gagik Khachatryan, the U.S. Ambassador to Armenia John Heffern, USAID Mission Director for Armenia Karen Hilliard as well as representatives of the Central Bank of Armenia and other concerned institutions attended the conference.
The pension system reformation was launched in Armenia on January 1, 2011. The obligatory accumulative pension system is planned to be introduced in the country in January 2014. The system targets all those citizens born later than Jan 1, 1974. The accumulated funds will enable future retirees to shape the size of their pensions at own discretion.
Under the reform plan approved by the government years ago, Armenia was to switch to the new system in January 2010 wh ereby the amount of monthly benefits paid to retired citizens will depend on their and their employers’ contributions to the fund. People will send to their accumulative pension account 5% of their salaries every month, and another 5%, but no more than AMD 25,000, will be added by the government. 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. -0--