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LAW OF THE REPUBLIC OF ARMENIA

of December 30, 2010 No. ZR-244

About funded pensions

(as amended on 27-04-2020)

Accepted by National Assembly of the Republic of Armenia on December 22, 2010

The purpose of this Law is creation of opportunity to persons who paid during labor activity in the Republic of Armenia accumulative pension contribution to receive at retirement age in addition to national pension additional pension incomes, providing direct connection between the made pension contributions and the size of the received pension, and also provision of opportunity to person who contributed to influence the size of funded pensions by the choice in the procedure for person managing its accumulated funds established by this Law and policy of management of these means, and also in the cases provided by the international treaty in the international organization.

Chapter 1 General provisions

Article 1. Subject of regulation of this Law

This Law regulates the legal relationship arising in connection with accumulative component and voluntary pension component, establishes concept of social fee, circle of payers of social fees, payment procedure of social fees, conditions and procedure for transfer of accumulative assignments by the Republic of Armenia to the retirement accounts opened on names of persons who paid social fee, functions of the holder of the register of the participants managing the pension fund, depositary of the pension fund and operators of the account, the right and obligation of participants of accumulative pension component, maintaining retirement accounts, investment of accumulative pension assets, types of funded pensions and their payment, mechanisms of guaranteeing payment of funded pension to persons who paid social fees, responsibility for violation of requirements of this Law the regulatory legal acts adopted on its basis and other legal acts and also governs other relations, connected with funded pensions.

Article 2. The basic concepts used in the Law

1. In this Law the following basic concepts are used:

1) the personified accounting – according to the Law of the Republic of Armenia "About the personified accounting of the income tax, income tax and social payment;

2) the individual entrepreneur – according to the Law of the Republic of Armenia "About the individual entrepreneur", except for the individual entrepreneurs who are considered only as the subject of microentrepreneurship, established by the Tax code of the Republic of Armenia;

3) annuity – according to the Law of the Republic of Armenia "About insurance and insurance activity";

4) the salary – the salary or other payments equated to it, and also the contractual income (the list of salary and other payments equated to it establishes the Government of the Republic of Armenia);

5) insurance company – according to the Law of the Republic of Armenia "About insurance and insurance activity";

6) the employer – the legal entity registered in the state register of the Republic of Armenia, organization of the foreign legal entity, branch or representation of the foreign legal entity, the individual entrepreneur, organization, local government body, and also the notary which based on civil labor or on performance of works (provision of services) of agreements, or in the procedure established by the law actually uses work (services) of citizens, paying them the income;

7) ceased to be valid according to the Law of the Republic of Armenia of 29.12.2017 No. ZR-291

8) guarantee fund – the fund created according to article 46 of this Law;

9) self-employed person – the physical person which is not hired employee, the individual entrepreneur or the notary, gaining income from any activities which are not forbidden by the law (except for the salary and the income equated to it, the entrepreneurial income and the contractual income) (including making agricultural products, gaining income from realization of agricultural products, gaining income on the basis of civil agreements, engaged in the types of activity included in the list of Appendix No. 3 to the Tax code of the Republic of Armenia), and also considered only as the subject of microentrepreneurship established by the Tax code of the Republic of Armenia;

10) program payment – the amount provided in accordance with the established procedure to the participant on reaching retirement age in monthly section due to repayment of the shares of the pension fund enlisted on the retirement account opened on his name;

11) the account bridge – the sub-account opened on the single treasurer account of the state body in the financial sphere authorized by the Government of the Republic of Armenia on which from the single account social payments for transfer to the register of participants are enlisted;

11. 1) the single account – according to the Tax code of the Republic of Armenia;

12) pension secret – any, connected with participation of person in accumulative component or voluntary pension component data on the retirement account, made for (in advantage) person accumulative assignments, voluntary pension contributions which became known to the employer, the state authorities, the Central bank, the holder of the register of participants, the operator of the account, the managing director of the pension fund, depositary, and also person managing guarantee fund, trade, insurance, bank or official secret of person, and also, any other data on the participant which the participant intended to keep in secret, and about what the employer, the state authorities, the Central bank, the holder of the register of participants the operator of the account, the managing director of the pension fund, depositary, and also person managing guarantee fund were informed or shall be informed;

13) voluntary pension contribution – the fee made by the participant and (or) other person for (in advantage) the participant for the purpose of receipt of voluntary pension;

14) voluntary pension – the pension paid within voluntary pension component according to the rules established by this Law;

15) the retirement account - the account opened addressed to person, making social payment at the holder of the register of participants or acquired the shares of the pension fund in the procedure established by the law where shares of the acquired obligatory pension fund, and also data on quantity of shares of the obligatory pension fund, estimated cost these shares, other data about accumulative the assignments made for acquisition of these shares are considered established by the law or other legal acts;

16) retirement age – the age established by the Law of the Republic of Armenia "About national pensions", granting pension entitlement on age;

17) the pension fund – fund which assets are created due to the accumulative assignments (the obligatory pension fund) made without fail from the government budget of the Republic of Armenia according to the Law of the Republic of Armenia "About funded pensions" or at the expense of voluntary pension contributions (the Voluntary pension fund) both their investments, and which to participants from assets of fund of payment are made in the form of pension (the money corresponding to share of the participant in assets of fund returns) after achievement of retirement age by the participant, and also in others, the cases provided by the Law of the Republic of Armenia "About funded pensions";

18) assets of the pension fund – total sum of the accumulative assignments and voluntary pension contributions made for the purpose of acquisition of the shares of this pension fund acquired at their expense assets and income gained as a result of management by them;

19) the managing director of the pension fund – the legal entity, according to the Law of the Republic of Armenia "About investment funds" the having right to manage the pension fund;

20) Central bank – Central bank of the Republic of Armenia;

21) accumulative assignment – the cash assignment made for (in advantage) person making social fee for the purpose of acquisition of shares of the obligatory pension fund according to the rules established by this Law which is created of these social fees and means provided from the government budget of the Republic of Armenia according to this Law;

22) funded pension – the pension paid within accumulative component according to the rules established by Chapter 11 of this Law;

23) the operator of the account – the organization established by the Government of the Republic of Armenia which performs mediation in rendering services to participants by the holder of the register of participants;

24) capital pension – according to the Law of the Republic of Armenia "About national pensions";

25) registration plate of public service – the registration plate established by the Law of the Republic of Armenia "About registration plate of public services";

26) the tax agent – according to the Tax code of the Republic of Armenia;

27) the entrepreneurial income – taxation basis on profit, subject to obtaining according to the Tax code of the Republic of Armenia from the business and notarial activity performed by the individual entrepreneur and the notary (till 2018 – the annual taxable income which is subject to obtaining according to the Law of the Republic of Armenia "About the income tax");

28) the participant - person making (made) social payment according to the procedure established by this Law, for (in advantage) which of the government budget of the Republic of Armenia is made accumulative assignment, or for (in advantage) which voluntary pension payments, or person who in the procedure established by the law acquired shares of the obligatory pension fund are made. In sense of this Article, participant is not the managing director of the pension fund;

29) the register of participants - single system of data on participants and shares of the obligatory pension funds considered on pension the accounts opened on their name. All information which is available in the register of participants is property of the Republic of Armenia;

30) the holder of the register of participants – the legal entity who based on the agreement signed with the Government of the Republic of Armenia keeps the register of participants and also performs other functions provided by this Law and the agreement signed with the Government of the Republic of Armenia;

31) the notary – according to the Law of the Republic of Armenia "About notariate";

32) depositary – person performing storage of assets of the pension fund according to the Law of the Republic of Armenia "About investment funds";

33) the contractual income – income (except for the entrepreneurial income) gained from the employer for performance of works (renderings of services) according to civil agreements;

34) the scheme "the established pensions" – voluntary pension scheme in case of which the insurance company promises the participant pension in specific size voluntary pension contributions depend on the agreement signed with insurance company and can be irregular, and the size of pension does not depend directly on the size of the made voluntary pension contributions and profitability of investment of these fees;

35) the scheme "the established pension contribution" – voluntary pension scheme in case of which the voluntary pension contributions made for participants are estimated in the amount of certain percent from their income or on any other regular basis and the size of pension depends on the brought voluntary pension contributions and the size of income gained from investment of these fees;

36) social fee – the target fee made in the government budget of the Republic of Armenia according to the procedure and the size established by this Law;

37) the obligation on social payment – the amount of the social payment paid by the tax agent having the obligation on calculation and transfer of social payments for hired employee, being the participant and the penalty estimated for violation of provisions of this Law. The amount of social payment of the individual entrepreneur who is the participant, the notary, self-employed person and hired employee of the employer exempted from obligations of the tax agent;

 38) hired employee – person which is in employment relationships with the employer (including with the employer exempted from obligations of the tax agent) in the procedure established by the law, including the public employee (except for the serving bodies of defense, police, homeland security and commander and not commander structure of system of service of rescuing, criminal and executive employees and forced contractors), and also person gaining income (except for the entrepreneurial income) from the employer for execution of works (provision of services) according to civil agreements;

39) affiliates – according to the Law of the Republic of Armenia "About investment funds".

Other concepts used in this Law are applied in the sense established by the Civil code of the Republic of Armenia, the Laws of the Republic of Armenia "About investment funds" and "About the security market" if other sense of their use does not follow from provisions of this Law.

Article 3. The legislation regulating accumulative and voluntary pension components of the pension system

1. Accumulative and voluntary pension components of the pension system of the Republic of Armenia are regulated by the Constitution of the Republic of Armenia, the Civil code of the Republic of Armenia, international treaties of the Republic of Armenia, this Law adopted based on this Law by regulatory legal acts, other laws and legal acts.

Article 4. Sources of financing of funded pensions

1. Funded pensions are financed by the accumulative assignments brought for (in advantage) participants, and income gained from their investment.

Chapter 2 the Making social fee and production of social fee

Article 5. Making social fee

1. In the Republic of Armenia social fees make:

1) hired employees, notaries, the individual entrepreneurs who were born on January 1st, 1974 and later;

2) the hired employees which were born till 1974, notaries, individual entrepreneurs if in the procedure established by this Law provided the statement established by part 1 of article 33 of this Law (further – the statement for the choice of the pension fund);

3) self-employed persons – irrespective of age which in the procedure established by this Law submitted the application for the choice of the pension fund or based on Item 1 of this part, ever paid social fee.

2. Person cannot review the decision on acceptance, based on the statement for the choice of the pension fund, the obligation on payment of social fee.

3. The foreign citizens and persons which do not have nationality having the right to residence (residence permit) in the Republic of Armenia, make social fees in accordance with general practice, according to the procedure, established for citizens of the Republic of Armenia if other is not provided by the international treaty of the Republic of Armenia.

4. Person stops to make social fee if:

1) its retirement age was performed, and he submitted to tax authority the application for the termination of payment of social fee;

2) person, in the cases provided by this Law submits to the holder of the register of participants the application for receipt of funded pension.

5. The procedure for submission to tax authority of the statement, stipulated in Item 1 part 4 of this Article, the application form are established by tax authority and the state authorized body of the Government of the Republic of Armenia in the financial sphere the joint order. At the same time the hired employee submits the application to tax authority through the tax agent. In this case the statement is considered provided to tax authority from the moment of representation to the tax agent.

6. The holder of the register of participants notifies tax authority on provision of the statement, stipulated in Item 2 parts 4 of this Article, and tax authority, in established by the joint order of the state authorized body of the Government of the Republic of Armenia in the financial sphere and tax authority procedure – the employer.

7. The obligation of payment of social fee by the person who reached retirement age, or submitted to the holder of the register of participants the application for receipt of funded pension stops:

1) from the salary and from 1 date following after month of submission of the corresponding statement to tax authority or the holder of the register of participants for the individual entrepreneurs and notaries performing activities in the systems of the receipts tax and patent tax established by the Tax code of the Republic of Armenia as regards these types of activity;

2) from the entrepreneurial income – since January first years of submission of the corresponding statement to tax authority or the holder of the register of participants.

8. Person, as self-employed person, makes social fee from the gained income by the principle of voluntariness according to the procedure, established by part 4 of article 7 of this Law.

Article 6. Object and rate of calculation of social fee

1. Subjects to calculation of social fees are:

1) salary;

2) entrepreneurial income;

3) income gained as self-employed person.

2. Persons, stipulated in Item 1 parts 1 of article 5 of this Law, before achievement of retirement age make social fee in the following sizes:

1) from the salary:

and. in the amount of 5 percent if the monthly size of the salary does not exceed 500 000 dram,

. in the amount of difference between 10 percent and 25 000 dram if the monthly size of the salary exceeds 500 000 dram;

2) from the entrepreneurial income (except for case, stipulated in Item 3rd this part):

and. in the amount of 5 percent if the annual size of this income does not exceed 6 000 000 dram,

. in the amount of difference between 10 percent and 300 000 dram if the annual size of this income exceeds 6 000 000 dram,

3) as regards types of activity, taxable in the systems of the receipts tax and patent tax established by the Tax code of the Republic of Armenia in the amount of 5000 dram a month;

4) in the amount of 5 percent from income gained as self-employed person irrespective of the income size.

3. In cases of payment of social fees based on the statement for the choice of the pension fund, in case of achievement of retirement age by person, stipulated in Item 1 part 1 of article 5 of this Law (if person did not submit the application provided by part 4 of article 5 of this Law), person makes social fee in the following sizes:

1) in the amount of 5 percent from the salary, from the entrepreneurial income (except for case, stipulated in Item the 2nd this part), from income gained as self-employed person;

2) as regards types of activity, taxable in the systems of the receipts tax and patent tax established by the Tax code of the Republic of Armenia in the amount of 5000 dram a month.

4. Person makes social fees in the amount of, established by part 3 of this Article:

1) from the salary of the month following behind day of submission of the statement (opening of the retirement account based on the statement according to the procedure, established by this Law);

2) from the salary of the month following behind day of achievement of retirement age by person, stipulated in Item 1 parts 1 of article 5 of this Law;

3) from the entrepreneurial income of year of submission of the statement (opening of the retirement account based on the statement according to the procedure, established by this Law), achievements of retirement age by person, stipulated in Item 1 parts 1 of article 5 of this Law,

4) as regards types of activity, taxable in the systems of the receipts tax and patent tax established by the Tax code of the Republic of Armenia, since the month following behind day of submission of the statement (opening of the retirement account based on the statement according to the procedure, established by this Law), achievements of retirement age by person, stipulated in Item 1 parts 1 of article 5 of this Law.

5. The social payment established by Items 3 parts 2 and 2 of part 3 of this Article the final obligation in the social payment estimated as regards types of activity, taxable in the systems of the receipts tax and patent tax established by the Tax code of the Republic of Armenia is considered.

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