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Chilean Reformer Shares Experience With Armenian, Georgian Ministers


Armenia -- Prime Minister Tigran Sarkisian (R) and Chile's former Labor Secretary Jose Pinera at a meeting with Armenian and Georgian officials dealing with pension reform, 23May2011.

Armenia -- Prime Minister Tigran Sarkisian (R) and Chile's former Labor Secretary Jose Pinera at a meeting with Armenian and Georgian officials dealing with pension reform, 23May2011.

A prominent Chilean economist who helped to privatize his country’s social security system shared his reform experience with senior Armenian and Georgian government officials as he visited Yerevan at Prime Minister Tigran Sarkisian’s initiation on Monday.


Jose Pinera, widely recognized as the architect of Chile’s private pension system, discussed details of the world-famous reform with them after a separate meeting with Sarkisian.

“Chile’s experience enables us to better understand complications and difficulties that people carrying out such reforms face and the best ways of overcoming them,” Sarkisian said, introducing Pinera to participants of the discussion.

The participants included senior Armenian officials dealing with the ongoing reform of Armenia’s pension system as well as Georgia’s Minister of Labor, Health and Social Affairs Andrew Urushadze and one of his deputies. An Armenian government statement said they asked Pinera questions about various aspects of the Chilean reform.

Pinera served as labor minister in the government of Chile’s late dictator General Augusto Pinochet when the reform was launched just over 30 years ago. It involved the introduction of personal retirement accounts with private pension funds that allowed workers to opt out of the state-run social security system.

After years of delay and preparation, Armenia began in January a gradual transition to a similar system whereby the amount of monthly benefits paid to retired citizens will depend on their and their employers’ lifelong financial contributions. The existing pay-as-you-go system essentially does not differentiate between pensioners’ employment histories.

Armenia’s State Social Security Service began keeping track of the social security payments of all officially registered workers in 2005. Each of them has had a personal pension account and social security number since then.

The government says the reform is vital in view of the country’s aging population. According to government data, the 460,000-strong national workforce is already outnumbered by 520,000 or pensioners. This is one the reasons why the average monthly pension in Armenia is equivalent to less than $100.

The government’s reform strategy was criticized by opposition deputies from the Armenian Revolutionary Federation during parliament debates last year. They said that the new system will not be more sustainable and fair than the existing one.

Pinera, who now works at a Washington-based libertarian think-tank, the Cato Institute, will meet with economics professors and students of Yerevan State University (YSU) on Tuesday. A YSU statement said Urushadze and Armenian Labor and Social Affairs Minister Artur Grigorian will also attend the meeting.
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