The Armenian government is successfully implementing a controversial reform of the national pension system which sparked angry street protests three years ago, Labor and Social Affairs Minister Artem Asatrian insisted on Tuesday.
The new Western-backed system, which took effect in January 2014, will gradually cover 270,000 or so Armenian workers born after 1973. It requires them to earn most of their future pensions by contributing sums equivalent to at least 5 percent of their gross wages to private pension funds until their retirement.
The government said that the previous mechanism for retirement benefits based on so-called solidarity of generations is not sustainable because of Armenia’s aging and shrinking population.
The reform met with fierce resistance from many affected workers mostly employed by private firms. Thousands of them demonstrated in Yerevan in early 2014.
Armenia’s Constitutional Court effectively froze the pension reform in April 2014. The government responded by making it mandatory only for around 70,000 or so public sector employees for the time being. A law subsequently enacted by it allowed people working for private entities not to be covered by the new system until July 2018.
Asatrian spoke of “very good results” already generated by the reform as he answered questions from Facebook users in the RFE/RL studio in Yerevan. “Today we have more than 170,000 participants of the [new] system, 70,000 of whom are public sector employees and the more than 100,000 others work in the private sector,” he said.
“If I’m not mistaken, around 80 billion drams ($170 million) [in pension taxes] has already been accumulated in the system,” the minister went on. He said the pension funds have invested over 70 percent of that money in Armenian bonds and other securities.