Wednesday, 28 November 2012
Prime Minister: “Together with the State, every Armenian citizen is responsible for a dignified future.”
Prime Minister Tigran Sargsyan attended the “Pension Reform. Prospects and Reality” two-day international international conference, held on the sidelines of the second annual conference on pension. The event is hosted is by the Ministry of Labor and Social Affairs, the State Social Security Service and the Pension Awareness Center Foundation.
Welcoming the participants and appreciating the format of discussions, the Prime Minister said the pension reform is among the most complex improvements, which affects all public institutions and calls for radical changes.
”More than eight years have passed since we first spoke about the need to introduce a funded pension system in the Republic of Armenia. In the meantime, financial and technical assistance came from different structures. We have a team of young professionals familiar with the international experience and have the required knowledge. We have models allowing us to consider different scenarios and estimate the most optimal way for Armenia. Also, we have set up a center that aims to inform the public of our pension reform measures. Our concept has been criticized enough and we should take advantage of it, because our opponents are trying to discover and present to the public its weaknesses,“ the Prime Minister said.
Tigran Sargsyan noted that under the distributive pension system, the pensioners’ living standards are dependant on the country’s socio-economic situation and changes in the global economic conjuncture rather than on their employment record. Unable to shoulder the burden, the developed countries are trying to revise the retirement age and refrain from certain social obligations.
According to the Premier, experts point out that unlike the developed countries, Armenia still has a window of opportunity and ought to use it through pension reform: “Together with the State, every Armenian citizen is responsible for a dignified future and has to make contributions to a personal account. In order to increase their motivation, the State undertakes to double its citizens’ savings. This approach compels the society to change its thinking in this area. Our youths have to master this concept, since as of January 1, 2014 they will have to make choices and plan their own future.”
The Prime Minister said that the State will not give up its commitment in case of pension funds. In particular, the funded pension system implies a component of minimum social guarantees, where the State assumes full responsibility: “The State remains responsible for the socially vulnerable groups, ensuring minimum social security to all its citizens.” There will voluntary pension funds for those citizens wishing to contribute more than the minimum amount specified in the legislation.
The Prime Minister also referred to the management and guarantees concerning the savings. “There have been lots of political speculations on this issue. Our concept is being misinterpreted. Some are trying to scare people asserting that the State is going to waste people’s savings. Here important is who will manage the funds. Based on international experience, we have defined strict criteria for the selection of governors and the management of funds. The funds so accumulated will be stored in reliable archives, which will be the world’s most secure assets. Either the State will guarantee certain risks related to inflation and exchange rate.”
Presenting the government’s pension reform efforts, the Prime Minister said that a system of individual accounts is being introduced in Armenia to provide that at least 65 thousand economic entities have electronic signatures by 2013 in order to submit electronic returns the tax authority.
In the words of Tigran Sargsyan, any reform implies a change in the social behavior which is a lengthy process. As a success story, he cited the introduction of the institute of mandatory vehicle insurance which is no longer perceived as a negative step. In this regard, the head of government stressed the need to study and master the international experience.
Addressing the forum, Head of the USAID Armenia Mission Karen Hilliard praised the government’s pension reform. “The government of Armenia is ready to launch a three-tier pension system that will end poverty among pensioners. Cooperating with international experts, the government has developed a project to help people participate in the process of pension savings. It has a responsibility to educate and inform citizens about the system, while the present generation as the main beneficiary of the system should realize that they are supposed to bridge the gap during the transition.”
Scheduled for November 27-28, the Yerevan-hosted event is attended by more than 130 participants from the CIS and EU-member States, including pension fund managers, professionals, representatives from government agencies, commercial banks and other financial institutions, associations, non-governmental organizations, experts and asset managers.
The annual conference aims to explore the experiences and challenges in the pension sector, as well as to review the impact of the first two years of pension reform in Armenia. The forum is supported by the U.S. Agency for International Development and the International Association of Pension and Social Funds.
