Armenia passes law on switching to pension savings system

The Armenian parliament has passed a law on switching to a pension
savings system by 70 to 14 in the first reading, news.am reports. The
switch is applied to 5 basic laws and 47 amendments.

Armenia will implement a voluntary pension savings system on 1st
January 2011. The obligatory system will be implemented in 2014.
Pensions will rise from 25% of average wages to 50%. Pensioners will
pay 5% from their income, matched by a 5% contribution from the
government. Every pensioner will have a minimal guaranteed pension
income.

This scheme involves banks, investment and insurance companies. A
pension fund will become a type of investment fund. People can
conclude an agreement with an insurance company to receive a certain
sum of pension, regardless of the amount they contributed earlier.

Citizens born in 1974 and after will be part of the obligatory pension
savings system. Older people will have the right to join too.
Investment and pension savings funds will offer fixed pension
payments. Managers of pension funds will be forbidden to use
pensioners’ contributions to buy real estate or valuable metals. They
can be converted into securities.

The new law was criticized by the ARF fraction Dashnaktsutiun. The
fraction’s leader, Vaan Ovannisian, said that the document must be
passed in a nationwide referendum.