Conflict about pensions breaks out in Armenia

In Armenia public protests against the introduction in the country of a mandatory funded pension insurance system have been continuing for several days, and people have taken to the streets not only in the capital but also in regional centers. Citizens are outraged that the Armenian government is trying to
ignore the decision of the Constitutional Court from January 24, which temporarily suspends the operation of Article 76 and paragraph 3 of Article
86 of the law "On Funded Pensions." According to this decision, employers are exempt from liability for non-payment of pension contributions, and thus the law on a mandatory-funded pension can simply be ignored.

After the decision of the Constitutional Court, an absurd situation has formed in the country. Contributions to the pension funds amounting to 5% of salaries are still produced in state institutions, including schools and ministries, against the wishes of the citizens. At the same time the Ministry of Finance, the State Revenue Committee and the Central Bank warned entities that failure to take the deductions would entail serious consequences.

In particular, as if the Constitutional Court's decision did not exist, Minister of Finance David Sarkisian spoke about the mandatory transfer of the first cumulative contributions to the treasury account "Most". In turn, Minister of Labor and Social Affairs Artem Asatryan also stated that "employers as tax agents are required to implement mandatory accumulation of payment."

Last Friday the Central Bank issued an official document, which states that in case the provisions of the law "On Funded Pensions" being contested in the Constitutional Court, are recognized as constitutional, all the participants in the funded system will have to make payments for the "skipped" period from January 24. According to the Central Bank, the Constitutional Court " did not release participants of the funded system from the obligation to pay and the relevant provisions of the law are not suspended."

Measures to counter the decision of the Constitutional Court are also taken at the level of documents. Electronic reports approved by the State
Revenue Committee can be legally filled in, if pension contributions are included in the data on income tax. To avoid this, employers must give up filling in the tax report as a whole, and that is fraught with administrative sanctions.

According to the parliamentary deputy Artsvik Minasyan, the government should respond immediately, otherwise it will happen to interfere with the implementation of decisions of the Constitutional Court. The Ministry of Labor contends that it takes months to make changes to existing programs.

As a result, the Ministry of Finance, the Central Bank and the Committee for State Incomes, lacking the support of the Constitutional Court, chose to use
tactics of pressure on the citizens of Armenia. Such tactics can be explained in two ways. First, it is possible that pension contributions are part of a certain economic scheme designed to cover "budget holes." Secondly, the government could not have expected such a strong negative reaction from society and simply got confused, and the threatening tone is a consequence of this panic.

Meanwhile there is reason to panic: on February 8 a rally against the accumulation system took place in the third largest city in the country, Vanadzor. The activists of the civil initiative "I Am Against" are sure that the movement has spread to other cities and regions, including Gyumri, Kapan, Alaverdi and Ararat. The opposition has also intensified: representatives of leading opposition forces indicated the need to include the question of a vote of no confidence in the government on the agenda.