Government Signals No Letup In Pension Reform Efforts

A controversial reform of Armenia’s pension system, which sparked angry street protests three years ago, will be completed as planned next year, Labor and Social Affairs Minister Artem Asatrian said on Monday.

The new Western-backed system, which took effect in January 2014, will gradually cover 270,000 or so Armenian workers born after 1973. It requires them to earn most of their future pensions by contributing sums equivalent to at least 5 percent of their gross wages to private pension funds until their retirement.

The government said that the previous mechanism for retirement benefits based on so-called solidarity of generations is not sustainable because of Armenia’s aging and shrinking population.

The reform met with fierce resistance from many affected workers mostly employed by private firms. Thousands of them demonstrated in Yerevan in early 2014.

Armenia’s Constitutional Court effectively froze the pension reform in April 2014. The government responded by making it mandatory only for around 70,000 or so public sector employees for the time being. A law subsequently enacted by it allowed people working for private entities not to be covered by the new system until July 2018.

Asatrian made clear that the deadline will not be extended next summer despite the risk of renewed anti-government protests. He again called the reform a success, saying that the new system currently covers more than 180,000 workers and most of them work in the private sector.

Mane Tandilian, an opposition parliamentarian who was one of the organizers of the 2014 protests, dismissed the minister’s statements. “I don’t know of a single people happy [with the reform,]” she told RFE/RL’s Armenian service (Azatutyun.am). “I only know many people who were forced to enter the new system and now have many grievances.”

Tandilian said she is planning to draft a bill that would make the retirement plan optional for all affected Armenians.

The employee contributions are made to two private pension funds whose combined assets currently stand at around 80 billion drams ($167.3 million). Asatrian said in July that 70 percent of that money has been invested in Armenian bonds and other securities.