Law on Funded Pensions held unconstitutional

On April 2, 2014, the Constitutional Court of Armenia held unconstitutional a number of provisions of the Law on Funded Pensions. It was established, in particular, that the Law violates the right to freely own, use and dispose of the property. The Court did not invalidate the Law immediately but set a deadline of September 30, 2014, for the Government to bring it in line with the Constitution. The Law requires employers to withhold at least 5% of after-tax income paid to employees who were under the age of 40 as of January 1, 2014 and transfer these amounts to the employees’ personal retirement savings accounts. These mandatory pension contributions shall be withheld on a monthly basis in addition to income tax at current rates ranging from 24.4% to 36%.


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