Pension Reform: New (suspended) law continues to cause headaches for workers and employers

The head of the Republican Union of Employers of Armenia says the law on mandatory pension savings is as strictly observed and imposed as the law on taxes.


Despite the fact that the Constitutional Court (CC) has not made its final decision about the controversial law on the pension reform, many employers have been making the 5-10 percent pension funds deductions from salaries. This has stirred public discontent and several state staffs have been holding acts of protest in this concern.

Tuesday, the personnel of Armenia’s strategically most important structure – Metsamor Nuclear Power Plant – joined the standoff; they submitted a letter to the Ombudsman’s Office demanding to protect their rights from being violated because of the law on mandatory pension savings.

Last week staffs of the Electric Networks of Armenia company, the subway, the South-Caucasian Railways LLC and the National Academy of Opera and Ballet performers staged protests.

According to the employers’ union leader Gagik Makaryan, many among employers make the payments because on some levels they are connected to the authorities, some because of the parliamentary mandates, while others do so to avoid problems in the future.

“We are told that the new pension savings system has been introduced for our future, however the compulsion mechanisms are equal to mechanisms and sanctions of imposing taxes. If an employer fails to make the payment, his property might be foreclosed equal to the size of the unmade payments, meaning that the punishment in this case is equal to the sanctions applicable by the tax code in case of tax evasion,” Makaryan told the press on Wednesday, adding that should the CC decide that the payments have to be made, those employers who would have not done so might have serious issues. “People found businesses with great difficulties, they buy property and would not like to lose it all by one strike.”