YEREVAN. – The state budget means are not enough to increase the pensions, since the tax burden on the workers becomes unbearable, and this undermines the motivation for productive work and hurts the economy.     

Armenian Prime Minister Tigran Sargsyan noted the aforementioned at the Third Annual International Pension Conference, which was held Friday in capital city Yerevan.

In his words, this condition aggravates the social situation of countries, albeit numerous countries  find a second option, as in Belgium, when the country’s government told its people, “Let’s waive certain obligations which the state has assumed, since the state budget can no longer withstand them.”     

As per Sargsyan, the logic of Armenia’s new pension plan is that all working citizens bear responsibility for their secure retirement.   

“Once you have a job and income, you are obligated to think, together with the state, about your secure retirement; this is the political content. [But] some forces that advocate the socialist ideology may be against this political content. 

“The working citizen, together with the state, must bear responsibility for his secure retirement, and accumulate [money] the very moment when he receives income,” the PM noted.  

Tigran Sargsyan added, however, that there is no country in the world which introduces the mandatory funded pension system and does not receive complaints and not face resistance, and therefore Armenia is not an exception.   

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 the hearing—on March 28—of the petition submitted by the four non-ruling-coalition parliamentary forces—the Armenian National Congress, Prosperous Armenia, ARF Dashnaktsutyun, and Heritage—, and into the constitutionality of the several articles of the law.

Notwithstanding this, some employers already are deducting the mandatory pension payment from the salaries of their employees.