Government Approves Proposal for Cashless Pension Payments

The Government of Armenia approved a package of amendments to the laws on "State Pensions" and "State Benefits" during today’s session, aimed at enhancing the efficiency of pension and care benefit payment processes. The proposal was presented by the Minister of Labor and Social Affairs, Zaruhi Batoyan.

She noted that Article 35 of the RA Law on State Pensions establishes the procedure for pension payment, stating that pensions are to be paid either in cash or cashless during the respective month. However, according to part 6 of the same article, pensioners receiving cashless payments are required to appear at the bank and sign a declaration of their presence in Armenia once a year. This requirement poses obstacles for pensioners to collect the needed declarations outside the bank premises.

Consequently, it is deemed appropriate to legislatively affirm that payments for pension security, elderly care, disability, survivor benefits, bonuses, honorariums, and other programs should be predominantly cashless.

Article 28 of the RA Law on State Benefits specifies the procedures for care benefit payments, indicating that such benefits are based on parental applications and can be issued either cashlessly or in cash. However, this article does not clarify that care benefits can only be paid in cash under a power of attorney, while according to part 6.1 of Article 28.1, unpaid amounts after the cessation of the right to receive care benefits are applicable for payment either cashlessly or in cash.

According to the proposed changes to the RA Law on State Pensions, it is suggested that pensions be paid cashlessly, with exceptions for certain instances: when the pensioner is classified as first or second group disabled, has reached 75 years of age, receives payment via power of attorney, or if the pension is being paid to minors over the age of 14, who can only receive payment in cash. In the remaining cases, payments will be made either cashlessly or in cash, depending on the individual’s choice.

Moreover, it is proposed that any unpaid pension amounts upon the death of the pensioner be paid exclusively in cashless form, with the exception of cases where these amounts are payable to a deceased's minor child over the age of 14, along with any unpaid pensions after the cessation of the pensioner’s right to receive pensions and burial benefits, regardless of residency.

Additionally, amendments to part 6 of Article 35 propose removing the requirement for declarations regarding presence in Armenia to be submitted exclusively within bank premises, granting the Government the authority to establish procedures for personal declaration presentation at the bank.

Similarly, the proposed amendments to the RA Law on State Benefits will establish the payment of care benefits cashlessly, with an exception for cases where the parent is classified as first or second group disabled. Just as with pensions, it will be clarified that care benefits paid via power of attorney can only be disbursed in cash.

It is important to note that the requirement for cash payments under power of attorney for pensions and care benefits stems from the peculiarities related to the payment process. For example, if the authorized person is also a pensioner and they in turn authorize another person to receive their pension, it results in the first pensioner receiving their payments through an empowered representation method, which contradicts Article 35, part 9, of the RA Law on State Pensions.

Furthermore, to ensure a smooth transition to a cashless pension system, it is proposed to implement this transition gradually, starting with Yerevan, Gyumri, and Vanadzor cities (from July 1, 2020), followed by other urban areas (from January 1, 2021), rural areas with more than 1,000 residents, and finally, rural locales with less than 1,000 residents.