Government postpones new pension scheme for private sector employees

Photo: Photolure

The Armenian government on Thursday decided to delay for a year the introduction of a compulsory accumulative pension scheme for private sector employees.

Prime Minister Hovik Abrahamyan told his Cabinet that the delay is conditioned by planned “large-scale” changes to be introduced in the Tax Code.

The controversial pension scheme was originally due to become mandatory for all workers in Armenia born after 1974 from July 2017.

Employees of state-run enterprises and organizations aged below 40 have seen 5 percent of their salaries deducted to the pension funds since the controversial law first came into effect in 2014.

The law originally sparked civic protests in Armenia, with many protesting its provision to pay now only to be able to get the funds after retirement at 63 as unfair in current heavy social conditions.

The Constitutional Court recognized portions of the laws unconstitutional in April 2014, but after certain amendments introduced by the government, including the delay of its application for private sector employees, it continued to be enforced for state sector workers later that year.