Raising the minimum pension in Armenia

On July 1, the minimum pension in Armenia increased by 4,400 drams ($11) to 36,000 drams (almost $94). The average monthly pension payments, benefits for old age, disability and in connection with the loss of a breadwinner have also been increased. The Ministry of Labor and Social Affairs reports that the changes will affect approximately 580,000 people.

However, according to economist Suren Parsyan, in conditions of 5.2 percent inflation, the increase in pensions and benefits cannot improve people’s living standards. He says this measure can only alleviate the situation.

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Since July 1, labor pensions have also increased. They are calculated based on the size of the basic pension, which before that was 21,000 drams ($54), and now it is 24,000 drams ($62.5).

The benefits for old age, disability and loss of a breadwinner have also increased:

• the amount of the old-age benefit is 36,000 drams ($93.7) instead of the previously paid 31,600 drams ($82),
• the amount of the benefit in connection with the loss of the breadwinner is 36,000 drams instead of 31,600 drams,
• for persons with disabilities with a deep degree of functional limitation (disability group 1), the amount of the allowance is set at 39,000 drams ($ 103) instead of the previous 31,600 drams, and in the case of a military pension of the same group (we are talking about compulsory military service) – 50,600 drams ($131.7) instead of 46,000 ($119.7).

This is the assessment of the Prime Minister of Armenia. According to him, AMD 36,000 is 99.5% of the approved minimum food basket.

“And those pensioners who spend their pension non-cash and thus use the 10 percent discount program will actually receive an amount exceeding 106 percent of the food basket,” Pashinyan said.

“This is an unprecedented event in the history of the country. For the first time, a pensioner will be able to cover his minimum food expenses from his pension,” Pashinyan said.

In the first quarter of this year, the cost of the food basket was 36,188 drams ($94.2) per person per month.

According to the prime minister, only 12 percent of pensioners (about 73,000 people) receive the minimum pension in Armenia. The rest, about 500,000 pensioners, receive a higher pension, and their amounts have also increased.

This is the opinion of Anahit Galstyan, head of the pension provision department of the Ministry of Labor and Social Affairs.

“In any case, when a person’s pension is not enough to meet vital needs, there will be dissatisfaction, despite all the positive changes. At the same time, it is necessary to understand that a pension is not a salary, but an insurance system, and there are no pensions equal to a salary in any country,” she stressed.

Anahit Galstyan recalled that after the increase, allowances will be paid to 580,000 people, and if pensions and benefits were increased by only 1,000 drams, almost 6 billion drams ($15 million) would already be needed. At the same time, the average pension is now 49,000 drams ($127.6), which is 30,000 ($78) less than the minimum consumer basket. In order to raise it by 30,000, about 200 billion drams ($520 million) are needed.

“In any case, spending more than 200 billion at once is unrealistic. Our steps should be based not only on the desires, but also on the economic capabilities of the state,” she said.

According to economist Suren Parsyan, the increase in pensions and benefits against the backdrop of high inflation will not lead to a significant change in the quality and standard of living of people. The changes will only mitigate the situation that arose in connection with the sharp increase in prices last year and this year.

The economist positively assesses the fact that for the first time average pensions are almost equal to the food basket, but at the same time he emphasized:

“This may contribute to the elimination of extreme poverty among pensioners, but they will remain poor anyway, because they need to buy not only food, but also use various services and goods.”

According to Parsyan, given the level of inflation, the government should regularly review the amount of pensions:

“It is very important to solve not only the problem of pensions, but also to propose solutions regarding pensioners’ health care costs. It is no secret that many people spend most of their money on medicines and various medical services.”

The expert says that the number of extremely poor people has doubled in 2021, most of them were pensioners.

“It is important to overcome extreme poverty. To do this, the government must also stimulate, create conditions for pensioners to work, because there are many of them who are ready to work. In terms of employment programs for pensioners, the government is passive.”

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