Profitability of Armenian pension funds reached 7.8% - Central Bank of Armenia

YEREVAN, November 28. /ARKA/. The profitability of Armenian pension funds is estimated at approximately 7.8%,  Vigen Shahnazaryan, Head of the Securities Market Department of the Central Bank of Armenia, said in an interview with Public Television of Armenia.

He explained that this figure represents the average over the past 10 years, since the establishment of the current pension system in Armenia.

‘’This is a very good indicator, considering the so-called 'risk profile' within which they operate, as well as its distribution and diversification," said Shahnazaryan, emphasizing that it is incorrect to compare this with bank deposit interest rates.

The Central Bank representative emphasized that last year the system recorded unprecedented profitability — over 15%, but in the long term, 7.8% is still a very good indicator.

Shahnazaryan noted that the assets of Armenia's pension funds have already exceeded 1 trillion drams, with 20%, or more than 200 billion drams (approximately $500 million), generated through profit, primarily from domestic investments.

"If we consider last year's profitability, about a third of the 15% was driven by investments in foreign assets," the head of the department explained.

Among the key aspects of managing pension fund assets, he highlighted the diversification of investments, which helps reduce overall risks.

New Initiatives in the System

The Armenian parliament is currently reviewing a bill proposed by the Central Bank, which suggests doubling the amount of investments that Armenian pension funds can allocate to other countries (from the current 15% to 30%). Additionally, pension funds will be allowed to invest directly in Armenia's economy (though no more than 10%, as is the case now), and fund managers will be permitted to manage other funds in order to attract additional investors. Another proposed change involves raising the limit on investments in stocks and securities from 25% to 35%.

In Armenia, the opening and management of participants' pension accounts, the issuance and redemption of units, as well as other registration operations, are centralized and carried out by the Central Depository (CDA), ensuring efficiency and cost savings. The CDA also holds the fund's assets. Decentralized asset management is handled by two international funds: ‘’Amundi-Acba Asset Management’’ and ‘’C-Quadrat Ampega Asset Management,’’ which are licensed and regulated by the Central Bank.-0-