Leaders of a pressure group strongly opposed to a controversial reform of Armenia’s pension system on Tuesday pledged to stage street protests against the new government’s decision to complete its gradual introduction next month.
The new Western-backed system, which the former Armenian government started introducing in January 2014, is to cover 280,000 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.
Thousands of employees mostly employed by private firms demonstrated against the new pension tax in Yerevan in early 2014. The protests organized by the Dem Em (I Am Against) group forced the administration of then President Serzh Sarkisian to make it optional for private sector employees until July 2018.
Prime Minister Nikol Pashinian’s government formally decided not to extend this deadline at a meeting held late on Monday. It also approved a bill that would temporarily cut the pension tax rate to 2.5 percent.
The government decision was denounced by organizers of the 2014 protests.
“The new system in its current form still does not enjoy the trust of the overwhelming majority of the public,” Dem Em’s Davit Manukian told RFE/RL’s Armenian service (Azatutyun.am).
“No significant changes have been made,” another member of the pressure group, Levon Harutiunian, said, downplaying the pension tax cut.
He said that the new government must at least further delay making the new tax mandatory for all workers aged 44 and younger. Or else, he warned, Dem Em will launch renewed protests against the reform.
Advocates of the reform say that the old mechanism for retirement benefits is not sustainable because of Armenia’s aging and shrinking population. According to government officials, more than 200,000 people are already covered by the new system.
Khosrov Harutiunian, a senior lawmaker representing Sarkisian’s Republican Party of Armenia (HHK) praised the new government’s stance on the issue, calling it “very prudent.” He noted that Pashinian and other opposition figures criticized the reform in 2014.
“They were saying back then that we are not telling the truth [about pensions,] that they don’t trust us,” Harutiunian told RFE/RL’s Armenian service (Azatutyun.am). “Now they have realized that we were not lying.”
The reform was also opposed in 2014 by businessman Gagik Tsarukian’s Prosperous Armenia Party (BHK) which holds five portfolios in Pashinian’s cabinet. A senior BHK parliamentarian, Gevorg Petrosian, said on Tuesday that he continues to have serious misgivings about the switch to the so-called pay-as-you-can system.
Still, Petrosian echoed Pashinian’s argument that the affected workers should no longer be worried about the fate of their extra pension contributions because the new government is far more popular than the previous one.
“So if the people trust the government let them cede a portion of their income,” he said. “The question is whether that government will last for 40 years and preserve the popular trust.”
The parliament is due to debate the pension bill later this month.
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