Armenia’s Constitutional Court has ruled elements of the country’s controversial mandatory pension system, but not the law itself, unconstitutional.
At the beginning of this year, Armenia launched a mandatory pension system requiring all persons under the age of 40 to contribute 5-10% of their salary to one of the pension funds managed by external asset managers, which had been selected by the Armenian central bank and government.
However, the reform caused wide-spread protests and was criticised by opposition parties, which challenged the system with the constitutional court.
Arman Vardanyan, chief executive of Austrian asset manager C-Quadrat’s Armenian business, told IPE that the court ruling meant that that implementation of the law had now been deemed “unconstitutional”. C-Quadrat, a subsidiary of German insurer Talanx, is one of the two foreign asset managers commissioned to manage pension funds in Armenia.
Vardanyan’s interpretation was confirmed by the Armenian justice minister, as quoted on Armenian news portal tert.am: “The Constitutional Court ruled that certain provisions of the law on funded pensions are unconstitutional - It did not rule the law itself unconstitutional.”
The Constitutional Court has declared the law will have to be amended to make it constitutional by 30 September.
A spokeswoman for the Armenian central bank told IPE: “Some of the disputed articles of the law (and the relevant ones in the interconnected laws) must be brought in line with the Constitution and the deadline for this is September 30, 2014.”
But the law will remain in place, she added.
Tert.am further quoted Felix Tokhyan, a member of the Constitutional Court: “The provisions of the pension law declared unconstitutional will remain in effect until September 30.”
“Since the pension law remains in force with all of its provisions, the mandatory payments shall continue to be made,” confirmed Vardanyan.