Pension reform: Five-percent social payment to be introduced for public sector employees

The Armenian government has endorsed a number of draft legislations, in particular, the package of amendments and additions to the Law on Funded Pensions.

The adoption of the package is conditioned by the April 2 ruling of Armenia’s Constitutional Court that found portions of the law to be unconstitutional.

Thus, according to the government’s decision, the system will be introduced for public sector employees on July 1, 2014, and on a voluntary basis and step by step within 3 years – for private sector employees.

The previous compulsory component of the accumulative pension system will not be in effect anymore. A target social payment to the state budget is introduced in the amount of 5 percent of the salary. The maximum social payment will not exceed 25,000 drams (about $60).

Prime Minister Hovik Abrahamyan emphasized at the session on Tuesday that salaries of about 200,000 public sector employees will be raised from July 1. “This fact is also a basis for a target social payment. It is a bold step of the government to allocate 38 billion drams for the wage increase. Armenian citizens should be aware of this reality,” he emphasized, as quoted by the government’s press service.

The government also approved draft amendments to the Administrative Court Proceedings Code and the Code of Administrative Offences. In particular, fines for frequent violations of traffic rules have been reviewed.

“We make concessions by reducing the fines by 50 percent and also suggest that the new law take effect not on September 1, but immediately after its adoption,” the premier said.