Reversing its own decision made a month ago, the Armenian government moved on Tuesday to again make Armenia’s ongoing transition to a new and unpopular pension system mandatory for workers aged 40 and younger.
Under a bill approved by Prime Minister Hovik Abrahamian and members of his cabinet, starting from next month public sector employees would no longer be allowed to opt out of the reform strongly resisted by the Armenian opposition.
The bill gives a three-year reprieve to their colleagues employed in the private sector. But from July 2017 they would have no choice but to save for retirement with monthly payments equivalent to 5 percent of their gross wages. Armenians earning 500,000 drams ($1,200) per month or more would pay a fixed fee of 25,000 drams.
Acting on an opposition appeal, the Constitutional Court ordered the government in early April to stop the introduction of the new retirement plan which began in January. It said that several key provisions of a corresponding Armenian law are unconstitutional.
The government claimed to have complied with the court ruling on May 13 when it pushed through the parliament amendments to that law allowing workers not to be covered by the reform. Many employees working for private firms have already exercised that right. But few public sector employees have followed their example. There have been growing reports in recent weeks that they have been warned by their superiors to opt for the new pension system or risk dismissal.
The latest draft amendments to the pension bill, which the National Assembly will start debating on Wednesday, do not change the essence of the reform strongly backed by Armenia’s Western donors. In effect, the government plans to only change several legal terms which drew objections from the Constitutional Court.
The ruling Republican Party of Armenia (HHK), which controls the majority of parliament seats, made clear that it will ensure the passage of the proposed changes. “The legislative package must come into effect on July 1,” said Vahram Baghdasarian, the HHK’s parliamentary leader.
Armenia’s four main opposition forces represented in the legislature will almost certainly reject the bill. Artsvik Minasian, a deputy from the Armenian Revolutionary Federation (Dashnaktsutyun), insisted that it is as unconstitutional as the original pension law.