Monday, March 31 2014

Today the Constitutional Court (CC) of Armenia  continues the hearings on the lawsuit, pursuant to which several provisions in the controversial Law On Funded Pensions,in particular, its mandatory component, are contested.  The lawsuit was filed by the four non-coalition parliamentary forces - ARFD, Armenian National Congress, Prosperous Armenia Party and Heritage party. 

As Deputy Chairman of Armenia's Central Bank, Nerses Yeritsyan, said at the hearings, if they remove from the law the point about the mandatory component of the given reform, we shall have few people to follow new reforms. For this reason, the state has chosen the system which will chose the pension fund instead of a citizen. 

He also added that as of January, only 155 out of 250000 people chose the pension fund and the manager. Asked about the current situation in this matter, he replied: "At present, 5337 people have independently chosen the pension fund". 

To note, 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 start of the hearings on March 28.  Notwithstanding this, some employers already are deducting the mandatory pension payment from the salaries of their employees.        
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 anti-constitutional.