Armenia is planning to expand the investment opportunities of pension funds to enhance their profitability and contribute to the country’s economic development. This was announced by Deputy Chairman of the Central Bank, Armen Nurbekyan, at a session of the Standing Committee on Financial-Credit and Budgetary Affairs of the National Assembly on November 25.
According to the regulator, around 460,000 people (525,000 including repeated counts) are already participating in the cumulative pension system. The Central Bank believes that this level of participation necessitates expanding the funds' ability to invest in the national economy.
The proposed amendments to the “Law on Cumulative Pensions” aim to ease investment restrictions for pension funds. Specifically, the proportion of investments in equities is expected to increase from 25% to 35%, potentially boosting the average annual return by 0.7% over a 30-year horizon. Additionally, direct investments in the real sector of the economy may be allowed up to 10% of assets, promising an extra return of 0.43% with reduced volatility.
The performance of the funds already demonstrates positive trends, according to the Central Bank of Armenia. In 2023, the average return reached 15.3%, with 9.4% recorded since the beginning of 2024, and an average of about 8% since the system's inception. To improve transparency, annual public reports involving fund representatives are planned.
The draft law received a favorable review from the committee and will be presented to parliament shortly. The proposed changes also include transitioning to an electronic format for informing participants, which is expected to optimize operational costs.
Earlier, BMG reported that the total assets of Armenia's mandatory pension funds had reached 959.5 billion drams ($2.46 billion) as of July 2024.
The asset distribution reflects a preference for a conservative strategy: balanced funds account for 10.7 billion drams ($27.5 million), conservative funds for 941 billion drams ($2.42 billion), and stable income funds for 7.7 billion drams ($19.8 million).
