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Armenia’s Social and Labor Minister Resigns Over Disagreements with Government

Armenia’s Minister of Labor and Social Issues Mane Tandilyan resigned on Tuesday in protest of a government decision to move forward with the implementation of the widely-discussed mandatory funded pension plans and make it compulsory for all citizens born after 1973 from July 1, 2018. Following Tandilyan’s resignation, Armenian Prime Minister Nikol Pashinyan went live on Facebook to speak about the government’s position on the issue.

Mane Tandilyan on the reasons behind her decision: Following my appointment as Minister of Labor and Social Issues, I proposed to postpone the full implementation of the mandatory component for a year and reform the system through public discussions to fine better-looking options for beneficiaries, adhering to the principle of free expression of will. Of course, there would have been some challenges along the way, but I had expressed my willingness to undertake these works in order to find the best and the most acceptable option for the society.

After much discussion, it became clear that the government does not support my proposal. Instead, they put forward and approved another option.

This is a matter of principle for me. The mandatory component has never had the support of the society, and there are many reasons for this. It has social, legal, political, and systemic problems; I do not see how it is possible to fully implement the mandatory component without discussing the issue with the public and trying to find the best and acceptable options. I was hopeful that the new government would pursue a new path to solve this issue. The imperative methods of solving problems that were used by the previous government were unacceptable for me.

Dear compatriots, I was against the mandatory funded pension plan, and, along with my allies, I used to organize protest actions against it, and I am still convinced that the the principle of free expression of will and choice should be at the core of the funded pension system. With this note, I am terminating my powers as Minister of Labor and Social Issues, which were solely tools for serving the citizens of Armenia.

Nikol Pashinyan on the government’s position on the issue: I want you to understand correctly what has happened and why. The provision on the funded pension remains in force, according to which, all without exception must pay the mandatory pension component from July 1. We have several options in this situation: a. do nothing; but this is unacceptable for us, since we believe that the new government should do something to at least somehow alleviate the situation of the people.

Option b. postpone the implementation of the law. However, when we postpone the law for 80,000 citizens, we treat the 207,000 citizens who remain in the system and continue to pay the component unfairly.

There is another option: to terminate the operation of this system. But this option carries a risk for us of entering into a conflict with the managers of these pension funds. We are not afraid of conflicts, but the funds are managed by internationally quite highly rated companies, and when we changed the rules of the game unexpectedly, news would quickly spread around the world that there were challenges and issue for undertaking economic activities in Armenia. It would be rather hard to invite other foreign business entities to Armenia, when we were known for changing the rules of the game during the game.

So what do we propose? We propose that the citizen pay only 2.5% of the component, and the state will cover the rest.

In case upon further studies it turns out the [mandatory funded pension] system should stop operating since it is,  say, unconstitutional, there is no tragic in it. All those citizens who’ve been paying [the mandatory component] will get their money back. If it turns out the system is reliable and can remain in operation with certain reforms, then it will remain in operation.