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Wednesday, August 23, 2017

New pension changes lead to pay bump for Armenian public servants

Armenia's public servants will receive a pay increase at the beginning of next month as a result of a newly approved amendments to the country's funded pension law--a move Armenian President Hovik Abrahamyan said was a "radical step."

Under the changes, the obligatory funded pension scheme will apply only public servants, an estimated 200,000 of whom will see their salaries increase on July 1; pension contributions will be voluntary for private sector employees, ARKA reports.

Earlier this year, the country's highest court suspended some provisions of the funded pension law that took effect at the start of the year and required all Armenian citizens born after 1973 to pay social security taxes equivalent to five percent of their monthly wages--an amount to be matched and doubled by the government.

The court also suspended part of the new law that would have penalized workers for failed or delayed pension tax payments, along with another provision that required employed citizens to choose a pension fund. The court said the law contradicted the country's constitution, leading it to void a part of the law, according to ARKA.

"This fact will serve as a basis for setting social payments' sizes," Abrahamyan said, ARKA reports. "The allocation of [more than $92,000] by the government for increasing their salaries was a radical step, and people should know this."