Large companies behind discontent with pension accumulation system

Astghik Mirzakhanyan, Head of the Social Security Department, Armenian Government Staff, told Tert.am that young people initiated the introduction of a compulsory pension accumulation system. Numerous roundtables and seminars had been held before the relevant bill was adopted in December 2010. Young people were supporting the idea. However, it is large companies that are actually behind the current discontent as they seek management of pension funds and are not going to raise salaries.

- The major reason for discontent is the fact of pension contributions being “compulsory.”

- We held large-scale discussions on the “compulsory” and “voluntary” contributions as far back as 2007. The law clearly envisages “voluntary” contributions form 2011 and “compulsory” contributions from 2014. It is time for the latter now. Why have not pensions been accumulated since the voluntary contribution was introduced in 2011? International practice does not know “voluntary” pension contributions. Rather, they are either compulsory or corporate pensions. Voluntary pension contributions are normally practiced by farmers or self-employed people.

We have studied the issue and know that if the entire world fails to accumulate voluntary pensions, much less are Armenians likely to accumulate pensions. Polls conducted in different states showed that up to 70% of young people preferred being “obliged.”

- Some people say they may die before they get the money back.

- In such cases the heirs may receive the money. On the other hand, good parents should think of not being a burden for their children. The accumulation system will ensure higher pensions. One more problem is that our children go abroad and cannot come back for ten or fifteen years. The pension accumulation system considers the government’s inability to pay more or less decent pensions with an unstable demographic situation. Working people pay taxes for our parents to receive pensions. Moreover, pensions are raised year by year, which means taxes must be paid.

Do not our young people realize it? They do realize very well. I think I see how the wind blows.

- Why is the wave of discontent now?

- I think someone is inciting them. When we launched this process, young people were not among our proponents. Rather, they were members of some political parties. For example, it was the Armenian Revolutionary Federation Dashnaktsutyun (ARF-D). We conducted long negotiations and it was at their request that we introduced the “voluntary” principle. We promised not to introduce the “compulsory” principle if the “voluntary” one proved effective. But it failed. We are neither the first nor the last. In 1990s we said that internal debts were better than external debts. You should borrow money from your own people because by repaying the debts you support both the people and the state.