Compulsory component of pension system suspended

At the government session today Prime Minister Hovik Abrahamian announced a number of provisions necessary for the organization of the process of pension reforms.

“1. Pension reforms are vital for our state and we must ensure a secure life in old age for everyone, regardless of their party affiliation and social status. We should achieve it by joint efforts. Success of pension reforms should become a victory for all political and social forces – Republican Party of Armenia, Prosperous Armenia Party, ARFD, Armenian National Congress, Heritage Party, ‘I am Against’ movement and other sociopolitical organizations and individuals.

2. On April 28, 2014 the National Assembly will start discussing a draft law, by which the parliament will suspend use of fines – prior to adoption of a legislative package about the law on accumulative pensions, envisaged by the Constitutional Court’s decision of April 2, 2014. In society, this draft law was already called the draft “on suspension of the compulsory component”. Those more or less familiar with this problem understand that the draft law de facto suspends the compulsory component’s effect at the moment.

3. The decision of the Constitutional Court of Armenia obliges us to change the package of pension reforms. By September 30, 2014 we shall have another package which should be in line with the Constitution of Armenia and acceptable to wide sections of the population.

4. From now on we shift to the formula of “pension reforms in conditions of maximum flexibility”. It means that we will achieve the goal in a most acceptable and least painful way and above all thanks to joint work.

5. I am convinced that pension reforms in our country will have a compulsory component, but we must find such a path of reforms that will be advantageous to everyone and encourage people to participate in that process. “A compulsory, but not forced one”.

6. When I together with you make sure that we have found a solution meeting the requirement of the Constitutional Court and acceptable to various strata of our society, then I promise all of you that we will consistently implement it. Even if some groups of people continue to express protest, I will be even more consistent, explaining to everyone that they are wrong, but I should be convinced that we act the right way.

So at the moment, under the new law the effect of the compulsory component of the accumulative pension system is de facto suspended until adoption of a new legislative package. At the same time I am sure that those organizations, which assumed the burden of compulsory contributions by raising salaries will continue making payments. This money will not disappear, it is money of employees and I just ask you to wait several months for establishment of mechanisms of their recalculation. Those employees who already made payment will only gain.

Starting from tomorrow we begin joint work with everyone. Those who will find some reasons to avoid joint work will insult me personally as I will not consider as fair the circumstance that the prime minister who was appointed only 10 days ago is not given an opportunity to amend the situation”, the prime minister said.