Pension Reform: Small victory for opponents, but unclear path ahead

Pension Reform: Small victory for opponents, but unclear path ahead


The public’s fight against the mandatory deduction component of the new law on pensions appears to have seen a small victory. The Government is preparing a project to release sanctions against employers who have failed to make salary deductions according to the law which the Constitutional Court has said does not meet constitutional standards.

The executive body announced Thursday evening that measures must be taken to drop sanctions against employers before thinking of making changes following the Constitutional Court’s decision on April 2 about “Accumulative Pension system”. The project that would free employers from making mandatory deductions is anticipated for discussion in the National Assembly April 28.

Meanwhile, the Armenian pressure group campaigning against pension reforms is preparing another strike in front of the president’s residence. At its rally on April 12 the group demanded that President Serzh Sargsyan follow the Constitution. This happened after the Constitutional Court had found some provisions of the pension reform law anti-constitutional.

“What’s being done now should have been done long ago. The ex-PM was supposed to have done it,” David Manukyan, Dem.am team member told ArmeniaNow, adding that this happened as a result of public pressure.

“Just dropping sanctions is not enough,” Manukyan added. “Not only the sanctions must be dropped, but the style of electronic report made for the Revenue Committee must be amended. The pension fund payment field must not be automated.”

For the government not to contradict its own position, according to which pension reforms will continue and that pension funds must be paid till September 30, as Manukyan put it, they must officially announce clearly that “the employers can transfer pension fund payments only for the citizens who will agree in written form to take part in that system.”

“This is the very demand in the Court decision – a person must be able to express his/her will,” says Manukyan.

And before Manukyan and his friends expect practical results from the government, there are opinions that after September 30 the executive may turn the pension fund payments into a taxation system.

“If the government doesn’t refuse the mandatory component, a further possible development of this act is mandatory social payments, which might be implied upon employers and employees, the state will have its participation as well. This is, in fact, a tax of a kind,” said Armenak Chatinyan, Civilnet economic analyst and added that in this case the conditions worsen for the public and they cannot legally complain against this.