YEREVAN, July 22. /ARKA/. Armenia's accumulative pension funds have been growing by an average of 9.5% per year since 2014, Vigen Shahnazaryan, a leading expert of the Financial System Regulation Department of the Central Bank of Armenia, said at an online conference organized by the Club of Economic Journalists and the Konrad Adenauer Foundation.

In his words, more than 600,000 people today are registered in the accumulative pension system of Armenia, of which 370,000 are active users who made transfers in the last month.
About 77 thousand active users of the system are representatives of the state sector, and the rest are from the private sector.

"Fund shares are growing, even though there have been serious shocks over the past six years, Brexit, the fluctuation of the Chinese yuan. Shocks came in 2014 when there were currency fluctuations, there were adjustments in 2018 and the biggest shock came from the coronavirus. However, it should be understood that shocks are of a temporary nature, while important are long-term prospects for such funds," Shahnazaryan said.

He noted that since the beginning of the year, some major indices decreased 30-40% due to the downturn in world markets, which, accordingly, led to a decrease in shares.

“That is why many users of the system, when viewing their reports for the first quarter, could observe negative indicators of income for pension funds. This is normal, there are fluctuations depending on the situation on the markets. If you follow them on a daily basis, there may be different fluctuations, which is normal as these are market instruments, which are affected by all changes, both positive and negative," Shakhnazaryan said.

The main thing, according to him, in this matter is to consider the situation in the long term. He said that in general, since the beginning of the year, the profitability of pension funds is not bad. According to some forecasts, by the end of 2020 it will be 6-13%, depending on the fund.

"According to our data, since the beginning of the introduction of the mandatory funded pension system, Armenian pension funds have been growing by an average of 9.5% per year (from 9.7% to 10.6% depending on the fund), which is a rather high indicator," said Shahnazaryan.

The mandatory funded pension system was introduced in Armenia on January 1, 2014 and is valid for all citizens born after January 1, 1974. But after the recognition of a number of provisions of the law on funded pensions as inconsistent with the Constitution and invalid, the mandatory component was valid only for state employees. For other citizens, the legislation provided for the return of previously made pension payments. Later, the system became mandatory for everyone.

Under the law, 10% of income should be sent to the pension system, while citizens and the state paid them on a parity basis. According to the government's decision, since 2019, and the state has increased its participation to 7.5%, respectively, leaving workers only 2.5% of mandatory payments (with a salary of up to 500 thousand AMD). However, according to the law, this ratio should be reduced, from 2021 citizens will pay 3.5%, in 2022 the rate will rise to 4.5%, and from January 2023 it will reach 5%.

On July 1, 2020, new amendments came into force, according to which the maximum level of social payments (above this level, funds were not subject to social payments) from 500,000 drams to 1.020 million drams. From July 1, 2020, nothing will change for citizens who receive income below 500,000 drams, and for citizens whose income exceeds 500,000 drams, they will start paying 10% of their salary minus 37,500 drams (which will be paid state), but not more than 64,500 drams. -0----