YEREVAN, March 28. / ARKA /. If the current demographic trends continue, then by 2050 the proportion between employees and retirees in Armenia will be one to two , according to Hakop Hakopyan, head of an Armenian parliamentary committee on social affairs from the ruling Republican Party of Armenia, who defended today at the Constitutional Court the new pension scheme that took effect on January 1.
The constitutionality of the new pension law was challenged by three opposition parties in the National Assembly — the Armenian National Congress, the Armenian Revolutionary Federation, and the Heritage Party — along with the usually pro-government Prosperous Armenia Party.
They took the case to the Constitutional Court that decided to suspend Article 76 of the new pension law, which provides for penalties for failed or delayed pension tax payments, and the third paragraph of Article 86, which obligates employed citizens to choose a pension fund, among other parts of the law. Today the Court began examining the case.
According to Hakobyan, the current pay-as-you-go pension system can justify itself when the proportion between employee and retiree is 3 to 1. He argued that the current pension scheme is a source of social injustice and that shifting to mandatory funded pension system allows a decent old age.
The new pension system requires that all Armenian citizens born after 1973 pay social security taxes equivalent to 5 percent of their monthly wages, which will be matched and doubled by the government. That money has to be deposited with private pension funds licensed by the government late last December.
A recent Gallup International Association’s public opinion survey in Armenia revealed that over 88 % of respondents in Yerevan do not support the new mandatory pension scheme. -0-