Expert: Investing in the economy through pension funds will create  favorable launch environment in the post-crisis period

ArmInfo. "I do not think that the pension reform is untimely, since today the share of citizens in terms of social payments accounts for only 2.5%," Vigen Shahnazaryan, a leading expert of the Financial System Regulation Department of the Central Bank of Armenia, said during a conference initiated by the  Club of Economic Journalists of Armenia.

He noted that today one should focus on the opportunity to invest in  the country's economy through pension funds, which, according to the  expert, will help the government's anti-crisis efforts. <Pension  funds need long-term stability. And if we do this, then in the  post-crisis period we will have favorable launch environment,  "Shahnazaryan stressed.

At the same time, he noted that if the pension reform had not been  adopted, it would have led in the future to a global problem - an  insufficient level of savings, which in turn would have affected the  amount of pensions.

He recalled that according to the reform, from July 1, 2020, nothing  will change for citizens who receive wages less than 500 thousand  drams, for those whose income is higher, with a gradual decrease in  income tax, a similar increase in the threshold of pension payments  will occur. So, according to him, in 2023 these citizens will pay 10%  of their wages, of which the state will pay 37,500 drams. "As a  result, people will benefit more from lowering the income tax than  from raising pension payments," the expert said.

Shahnazaryan informed that today there are over 600 thousand citizens  in the accumulative pension system of Armenia, of which about 370  thousand have made active transfers in the last month. In this vein,  he noted that the lion's share falls on the private sector, while the  share of the public sector is only 77 thousand people. Speaking about  the profitability of pension funds in Armenia, the expert noted that  in the context of the last five years, starting from 2014, the latter  averages 9.5%.

To note, a number of lawmakers have prepared a draft, according to  which the changes provided for increasing payments to the pension  fund from July 1, 2020 are supposed to be temporarily canceled. The  lawmakers believe that the withdrawal of these funds from circulation  and the additional burden on the budget today, amid the crisis, is  completely unjustified. This statutory measure was not designed for a  force majeure situation. It artificially lowers the level of demand,  so over 8 billion drams will be withdrawn from circulation.  Independent analysts also believe that today it is not the time to  increase the assets of pension funds, since in any case these  resources are mostly spent either on the deposits of banks, which are  already suffering from excess liquidity, or are sent to government  securities. Thus, the state, on the one hand, allocates money for  pensions, and on the other, in fact, attracts them already as state  loan obligations. The Central Bank, in contrast to such a position,  is mainly concerned not to "let down" the management companies, and  therefore insists on observing the rules of the game.

To recall, the defined contribution pension system, obligatory for  persons born after January 1, 1974 (for citizens born before January  1, 1974, the pay-as-you-go pension system is in effect) has been  introduced in Armenia since January 1, 2014. Within the framework of  the mandatory accumulative pension system, there are two pension  funds: "Amundi-ACBA Asset Management" CJSC (from November 19, 2013)  and " C-QUADRAT Ampega Asset Management Armenia LLC'' (from November  29, 2013). The French company - 51% and ACBA-Credit Agricole Bank -  49% are the shareholders of CJSC "Amundi-ACBA Asset Management". The  Austrian investment company C-QUADRAT Investment AG - 74.9% and the  German company Talanx Asset Management GmbH - 25.1% are the  shareholders of C- QUADRAT Ampega Asset Management Armenia LLC.

The aggregate assets of pension funds are about 280 billion drams.  Their weighted average yield is 9.1% per annum.