YEREVAN, March 3, /ARKA/. Introduction of mandatory funded pension system in Armenia is theoretically possible, but difficult to implement in practice, said demographer Ruben Yeganyan.
"If the population of the country, particularly young people, embraced by the new pension scheme, were solvent, this reform would be acceptable in theory, but in practice it is difficult to imagine," he told ARKA.
According to him, the pension reform will create additional financial hardship for the population, which is already facing numerous difficulties.
Yeganyan argued that the segment of the population who the new scheme embraces should be given freedom to choose it voluntarily.
Armenia’s Constitutional Court suspended last month 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. The Court says it will conclude the inquiry on March 28, 2014.
The constitutionality of the 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.
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. -0-