YEREVAN. – The Constitutional Court (CC) of Armenia stressed that the track-record of more than fifty countries shows that the introduction of the funded pension system increases the stability of a country, and the well-being of the people.
The Government on Wednesday issued a statement with the aforesaid content.

“[But] at the same time, the court determined that the law has flaws, which must be corrected before September 30.
“The government will push forward this radical reform, which is aimed at improving the people’s well-being, within the framework of its proper constitutional formulations. 

“The government will adopt the subsequent action plan after receiving and studying the decision of the Constitutional Court,” the government statement also reads.

The CC on Wednesday deemed unconstitutional a whole series of articles in the new Law On Funded Pensions, which were contested with a lawsuit by the four non-ruling-coalition parliamentary factions’ MPs. Specifically, the mandatory component of this law was invalidated.

The CC, however, gave the parliament and the government time until September 30 to amend the aforesaid law’s provisions that were considered unconstitutional. In addition, all the mandatory pension deductions which already were made shall be reviewed.   

The new funded pension plan, which formally came into force in Armenia on January 1, 2014, is mandatory for those born in and after 1974 and voluntary for those born before 1974. In line with this plan, 5 to 10 percent of the monthly salaries in Armenia will be deducted and mandatorily be allocated to cumulative pension funds; the latter will be reimbursed as pensions once a person turns 63 years old. 

On January 24, however, the Constitutional Court decided to suspend the execution of some components in the Law on Funded Pensions pending its hearings, which commenced on March 28.  Notwithstanding this, some employers already were deducting the mandatory pension payment from the salaries of their employees.        

The law caused dissatisfaction among Armenia’s civil society, and therefore paved the way for the establishment of the “Dem.Am [I am against]” civic initiative, which opposes the mandatory component of the new pension law in Armenia. 

The four non-ruling-coalition parliamentary factions—i.e., the Armenian National Congress, Prosperous Armenia, ARF Dashnaktsutyun, and Heritage—likewise are against this new law, and they declare that its mandatory component is unconstitutional.