Frequently asked questions
Pension system
What pension system is operating in Armenia?
The funded pension system is operating in Armenia since 2014, following the previous distributive pension system.
Why did Armenia switch to a funded pension system?
In the recent years, Armenia has been experiencing an aging population (increasing life-expectancy, decreasing birth rates). To ensure the financial well-being of pensioners in the previous pay-as-you-go pension system, at least three employees should make social contributions for one pensioner. The indicator mentioned above, however, declined to one employee. As a result, the stability of the previously operating pay-as-you-go pension system decreased.
The funded pension system, the objective of which is to make contributions to fund personal pensions, solves the existing social and economic problems.
What is the difference between the funded pension system and the previous pay-as-you-go pension system?
In the funded pension system, you contribute for your pension yourself. Before retirement age, you contribute from your salary, and the State matches your contributions, which are then managed by the pension fund management companies. As a result, after retirement you receive your pension contributions and additional profit from the management of the contributions.
In the previous pay-as-you-go system, current employees finance the pension payments of the current pensioners.
What are the advantages of the funded pension system?
In the funded pension system, you contribute for your pension which is made of from your salary and the State co-financing.
Professional asset managers manage pension contributions and invest in local and international financial markets, currencies, and financial instruments. As a result, you indirectly invest in foreign stocks and bonds, your pension savings are diversified, and you can have long-term return from the investments of your pension savings.
Are my pension contributions guaranteed?
Yes, the Republic of Armenia guarantees the return of your pension contributions adjusted for annual inflation.
Me as a participant
Am I a participant in a funded pension system?
You are considered a participant of the funded pension system if you were born on January 1, 1974, and after, and if you are employed, work as a notary, are a private entrepreneur, or if you joined the system voluntarily.
Self-employed people or those born before 1974 can join the funded pension system voluntarily.
How much are my monthly pension contributions?
Each month 10% of your salary is accumulated in your pension account, 5% of which is contributed by the State, and the remaining 5% is contributed from your salary in case if your monthly salary does not exceed 500,000 AMD.
In case if your monthly salary exceeds 500,000 AMD, follow the link to get a more detailed structure of your pension contributions.
You can check your monthly and total pension contributions in the "Pension Account" section of ArCa application, through ATM or by visiting pension account operators.
How much pension will I receive?
Your pension is made up of pension contributions that you have accumulated up to your retirement age, which includes your pension contributions and the return earned from the management of these funds over the years.
To determine how much pension you can expect to receive at your retirement age, use the pension calculator.
When can I receive my pension contributions?
Participants of the funded pension system can receive their pension when they reach the retirement age of 63.
Before the retirement age of 63, you can receive your pension, if
- sufficient funds have been accumulated in the pension account (about AMD 20 mln),
- the participant is seriously ill as defined by the Law,
- the participant has been recognized as a disabled person with the third degree of limitation of the ability to engage in work activities,
- the participant is a non-resident who worked in the RA and returned to his country of residency.
Are my pension contributions inheritable?
Your pension contributions and pension fund shares are your property and are inheritable.
In case of death before retirement age, the shares in the pension account are inherited, and if the participant dies during the period of receiving a pension, pension contributions and the annuity are inherited.
How can I receive my pension?
At the retirement age of 63, you can receive your accumulated pension by the following means: (1) lump-sum, (2) annuity, and (3) program payments depending on the total value of the contributions.
- Lump sum: all the accumulated pension is redeemed in a single one-time payment.
- Annuity: your accumulated contributions are transferred to an insurance company which will pay you a pension in equal monthly installments for the rest of your life.
- Program payments: your contributions will continue to be managed in the pension fund, and the fund management company will distribute your pension over a period of 12 years (which is the current life expectancy period) and pay you pension through monthly redemptions.
For more detailed information on receiving your pension, you can follow the link.
Pension funds
What is a pension fund?
A pension fund is a pool of assets where you and other participants contribute for future pensions. Professional fund managers manage pension fund assets, invest in different financial instruments, manage the risks and reinvest the profits with the objective to provide long-term return on investment for the participants.
What is a pension fund share?
Contributing for your pension, you acquire pension fund shares in proportion to your contributions representing your ownership right to a portion of the fund's assets. Similar to buying a property, when the ownership certificate confirms the ownership right, pension fund shares verify your ownership right in the pension fund.
How are the funds managed?
The main objective of pension fund management is to ensure the long-term return of fund assets. For this purpose, depending on the fund you choose, up to 50% of pension assets can be invested in stocks, equity funds, and equity-equivalent instruments. The remaining is invested in bonds, deposits, fixed-income funds, money market instruments, and other financial instruments in Armenia and abroad.
Who is managing my pension fund?
C-Quadrat Ampega Asset Management Armenia, a licensed fund management company in Armenia, manages your pension contributions. The company was founded in 2013 as a joint venture between C-Quadrat Investment AG, Austria, and Ampega Asset Management GmbH, Germany, a member of the Talanx AG group.
The company's mission is to provide top-quality asset management services to pension savers in Armenia in line with the best western standards.
What are the fund manager's main functions?
Fund manager's primary functions are:
- allocating assets according to funds' investment objectives,
- minimizing investment risks,
- portfolio rebalancing,
- monitoring local and international financial markets,
- analyzing and assessing investment opportunities and more.
Why can't I manage my pension contributions?
Pension fund managers provide you with professional asset management services. With an expertise in asset management, fund managers are equipped with the knowledge, experience and tools needed to manage funds and are skilled in making the best investments in your interests. Moreover, investing your pension contributions in pension funds reduces investment risks due to the multi-layer diversification of assets, saves time, and reduces operational costs of investments.
Where are the pension fund assets invested?
The investment strategy of the funds is mainly based on two rules:
- A minimum of 60% of fund assets are invested in AMD, and the rest can be invested in foreign currency.
- Depending on the fund you choose, up to 50% of pension assets can be invested in stocks, equity funds, and equity-equivalent instruments. The remaining is invested in bonds, deposits, fixed-income funds, money market instruments, and other financial instruments in Armenia and abroad.
Learn more about funds' investment strategies and see the fund reports for the portfolios.
What type of pension funds can I accumulate my contributions in?
C-Quadrat Ampega Asset Management Armenia manages three pension funds. They differ by their investment strategies and risk corresponding to the equity investments in the portfolio. The greater the investment in equity, the higher the risk associated with the fund, and, consequently, the greater the potential for expected returns.
- Fixed Income (CQFIX) fund is suitable for participants with low-risk tolerance. 100% of its assets are invested in bonds, deposits, money market instruments, and fixed-income funds that invest in the above instruments. The fund does not invest in equities.
- Conservative (CQCON) fund is suitable for participants with moderate-risk tolerance. Up to 25% of fund assets can be invested in stocks, equity funds, and equity-equivalent instruments, and the remainder is invested in deposits, fixed-income funds, money market instruments, and other financial instruments.
- Balanced (CQBAL) fund is suitable for participants with relatively higher-level risk tolerance. Up to 50% of its assets can be invested in stocks, equity funds, and equity-equivalent instruments, and the remainder is invested in deposits, fixed-income funds, money market instruments, and other financial instruments.
What are the differences between pension funds?
Pension funds differ by their investment strategies and corresponding risk levels. Based on the size of higher risk and higher return equity instruments in the portfolios, there are lower-risk, medium-risk and relatively higher-risk pension funds.
Choose the pension fund or funds that match your risk tolerance level and investment strategy. Learn more about the C-Quadrat Ampega pension funds and their differences.
What affects the pension fund performance?
The Net Asset Value (NAV) per Share changes depending on the change in the net assets of the fund. The change in the NAV per Share is the fund's performance for the given period in percentage terms. As the the fund assets are invested in different financial instruments, factors affecting market prices of these instruments are also different, some of which can be changes in interest rates, foreign exchange rate or market fluctuations, etc.
What are the risks associated with pension funds, if any?
All investments are subject to risks: pension fund investments are also accompanied by number of risks, including market, credit, calculation, liquidity, operational or other risks. The risks can affect the fund price per share and the performance. Nevertheless, pension funds are considered relatively lower-risk instruments .
Fund assets are diversified according to multiple criteria, which is one of the most effective ways to minimize investment risks.
You can also diversify your pension savings by contributing to more than a single pension fund.
My account management
Can I manage my pension account?
Yes! You can choose the pension fund or funds that match your risk tolerance level and investment strategy.
Choose a pension fund, request pension account statement or register or update personal data by visiting pension account operators or online through "My Account" system or ArCa application.
Manage your pension account in 3 easy steps with ArCa application.
- Log in on ArCa website or mobile application.
- See your pension fund and contributions in the funded pension section.
- Choose your pension fund according to your risk tolerance. From now on, you will make pension contributions in your chosen fund.
How can I choose a pension fund?
Choose your pension fund now in 3 simple steps through ArCa application.
- Open the Pension Account section on the ArCa application.
- See the monthly contributions and your active fund in the transactions sub-section.
- Choose the fund corresponding to your risk tolerance. From now on, you will make pension contributions in your chosen fund.
You can also choose a pension fund by visiting Pension Account operators and submitting the corresponding form.
What should I consider when choosing a pension fund?
When choosing a pension fund, it is important to learn about the fund differences. In particular, the investment strategies and fund portfolios, and to evaluate the funds' performance of the funds in terms of return and diversification.
Plan your pension and determine your preferred risk level based on past experience or by answering a few questions. For example, how do you feel about investing in stocks, or how much risk is acceptable in investments?
When evaluating the profitability of funds, it is important to take into account both short-term and long-term performance. Learn more about pension funds' performance.
How can I save more?
In addition to your pension contributions, you can invest in an investment fund, which is an additional opportunity to ensure your financial well-being in retirement. Investing in CQ Armenia Growth (CQAG) investment fund, you decide on how much to save and contribute. The fund provides an opportunity to diversify your contributions in debt and equity instruments of local and international markets in order to generate additional returns in the long term.
Learn more about CQAG investment fund here.
How to stay informed?
You can monitor your pension account and contributions every day through ArCa application, and you can also follow changes in your pension account through quarterly and annual reports. If you do not receive pension account statements, you can register your email address through the ArCa application or pension account operators.
