Proposal to Exclude Multiple Job Work Experience from Pension Calculation Rejected

The government today rejected the legislative initiative proposed by Tigran Urikhanyan, a member of the parliamentary faction of the Prosperous Armenia Party, which suggested that the experience of working at more than one job simultaneously should be considered when calculating pensions.

Currently, under the existing law, only the work experience from one job is considered when calculating the pension for citizens of Armenia, allowing for only one year of work experience for each calendar year, with the exception of specific cases defined by law. However, a significant number of citizens have worked and are currently working in multiple jobs, paying taxes from each position. This work experience is overlooked when calculating the pension.

According to the government's justification, as stipulated in Article 15 of the Law on State Pensions, the amount of labor pension is the sum of the basic pension amount and the employment component of the pension. The employment component is the product of the years of contribution, the value of one year of contribution, and the personal coefficient of the pensioner.

The basic pension amount and the value of one year of contribution are determined by the government, taking into account financial capabilities. The income of the individual (salary) and the payments made from it are not considered when calculating the pension amount. This means that the only factor affecting the pension amount is the duration of the individual's work experience.

Furthermore, the duration of work experience is counted from the day of employment to the day of dismissal, regardless of whether the individual worked part-time during that period or the actual volume of work performed by the individual.

It is important to note that the same approach is applied when calculating the work experience duration, irrespective of whether the individual works overtime (e.g., 60 hours a week) or part-time (e.g., 24 hours a week).

In our estimation, the proposed revision of the principles for calculating work experience would significantly complicate the procedure for determining the duration of work experience (and consequently, the amount of labor pension), considering that it would require addressing cases where the individual works reduced hours or has multiple employment contracts with the same employer.

From a social justice standpoint, the revision of these principles is also problematic, as, for example, a teacher who worked in two schools at 0.25 positions (totaling 0.5) during the same period would accumulate more pension rights compared to a teacher who worked full time (1 position) in one school.

Taking the above into account, we recommend leaving the provisions under consideration in the draft law unchanged. The adoption of this draft would imply an increase in state budget expenditures, the extent of which cannot be determined due to the lack of relevant information.