Monday, July 2 2012 21:15
Deputy Finance Minister: Due to funded pensions, political debates will turn from populist promises into thoughtful discussions on economic issues
ArmInfo. Starting from 2014, Armenia will have a multi-level pension system with balanced adequacy and availability, Rosa Chiappe, Head of the USAID-funded Pension and Labor Market Reform Project (PALM) said at today's presentation of the pension reforms in Armenia.
She said that the new pension system will be more resistant to the financial crises and it will directly connect the future pension incomes of the employees with their earned incomes. As regards the launch of the voluntary pension contribution system, she said that many countries apply tax concessions to stimulate such pension contribution also by the employers, which reduces the governments' role in the pension system but their role remains irreplaceable in terms of pension provision of the vulnerable groups of the population.
For his part, Deputy Finance Minister of Armenia Vardan Aramyan said that the current pension system in Armenia, like in many countries of Europe, is unstable, as the numbers of the employees and retired persons are commeasurable and make up 460,000 people. As a result, the state has to finance the pensions from other sources: in 2011 the social contributions of the enterprises totaled 135 bln AMD (about $323 mln), and the aggregate volume of pensions amounted to 200 bln AMD. In addition, the birth rate in Armenia is dropping, and in 2011 this index made up 1.55 pro mille. The lifetime, in turn, is growing.
Aramyan added that many countries ensure the stability of the pension system due to transition from the principle of "solidarity between generations" to the principle of "fairness", and the state replaces its role of the pension system manager by the role of a regulator.
Aramyan also presented the levels of the future pension system of Armenia; in particular, he pointed out the social, labor, compulsory and voluntary funded pensions. He explained the mechanisms and guarantees of all the levels of the future system. According to him, the wide public involvement in the process of contribution of funds and formation of long-term money due to the pension contribution system will turn the political debates from populist promises into thoughtful discussions on investment protection and stimulation of economic growth.
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