Question 89. In which cases can a participant receive his funded pension savings before reaching 63?

The RA Law “On Funded Pensions” defines these 3 cases when a participant can withdraw his mandatory funded pension savings in the form of a lump-sum payment before reaching 63; 
• the participant has been recognized as disabled with a 3rd degree working incapacity;
• the participant is in critical condition and his/her vital organs are terminally affected (it is certified with the conclusion given by the RA Government authorized body in the field of healthcare)
• the foreign participant who has been working in the Republic of Armenia and now wants to return to the country of his permanent residence.

On the grounds of the above-mentioned three cases, when the mandatory funded pension fund shares are redeemed before the retirement age, the savings are transferred to the pension fund the participant has joined in the relevant foreign country in terms and conditions established by the RA Government. 
 
If the participant does not join any pension system in the relevant foreign country, then he can get his pension only after reaching 63. 

Question 90. What will happen to the participant’s funded savings in case he quits his job?

If the participant quits his/her job and gets no income, the participant’s mandatory funded pension savings will remain in his/her individual pension account and will be managed by the manager hereafter. For the whole period of being jobless, no targeted social contributions will be made by the participant and the only source for the account balance increase will be the income received from the management of these pension fund shares. In case the participant starts working again, the targeted social contributions will be again transferred to his/het individual pension account and new pension fund shares will be achieved at their expense.   

Question 91. Is an individual entitled to receive his/her funded pension if the individual loses his/her job before reaching 63?

The factor of losing one’s job has no sufficient legal basis for paying his/her funded pension before reaching the retirement age. A participant is entitled to get his/her funded pension in the following cases: 

• the participant has been recognized as disabled with a 3rd degree working incapacity; 
• the participant is in critical condition and his/her vital organs are terminally affected (it is certified with the conclusion given by the RA Government authorized body in the field of healthcare) 
• the foreign participant who has been working in the Republic of Armenia and now wants to return to the country of his permanent residence. 

The Law defines one more case for being entitled to withdraw one’s funded pension before reaching 63; 

• If the estimated value of the participant’s accumulated pension fund shares upon attaining age 55 is enough to buy life annuity equal to the 5-fold amount of the basic pension, the participant may get his funded pension at the age of 55 by concluding an annuity agreement providing the 5-fold amount of the basic pension and may get the rest of the money in his preferred form. This is called early funded pension eligibility.  

Question 92. Is the participant required to make targeted social contributions in case he/she has reached the retirement age but goes on working and does not receive his/her funded pension?

The liability for making a targeted social contribution is retained until the participant reaches the retirement age. 
  
When the participant becomes 63 years old, he/she is required to submit a request with the tax authority to be released from the responsibility to pay social contributions. The application in order to stop making targeted social contributions is submitted to the tax authority by the employer. 
In case the participant applies for a funded pension, his participation in the mandatory funded pension scheme is terminated regardless of the participant’s desire. 
  
If the participant submits no application to terminate his/her participation or to get a funded pension, then after reaching the retirement age the social contribution rate is set 5% of the basic income; no contributions will be made in favor of the participant from the 
State budget.  

Question 93. How will the individual’s pension savings be managed if he dies before reaching 63 and who will manage them?

In case the participant dies before reaching 63, his accumulated pension savings will be transferred to his/her heirs by the right of inheritance. On their selection the participant’s pension funds may be transferred to their pension accounts or be paid in the form of a lump-sum payment according to their application. 
  
If the heir is not a member of any pension fund and has no individual pension account, a new individual account will be opened in his/her name where the inherited pension savings will be credited.  

Question 94. How will an individual’s mandatory funded pension savings be managed if he dies before reaching 63 and has no heirs?

If an individual dies before reaching 63, the funded pension savings will remain at the pension fund and will be managed by the fund manager for 3 years. If no heirs claim the deceased participant’s pension savings during the three-year period and the shares are not inherited, then the pension savings will be recognized heirless and transferred to the State budget as defined by Law. 

Question 95. Is it possible to inherit (bequeath) one’s pension savings to several heirs in advance, i.e. to distribute the savings among several people?

Since pension savings are considered to be one’s personal property, the participant has a right to bequeath them at his discretion. Here the rules of Inheritance and Bequest will operate as defined by the RA Civil Code.

Question 96. How will a participant’s heir receive the money if he is a citizen of a foreign country?

If a participant’s heir is not a citizen of RA and has not a pension account opened at the Register of participants, then a new pension account will be opened for him at the Register of participants to which appropriate pension funds will be transferred. The funds can be used only after the heir reaches age 63. Afterwards, if the foreign heir has an individual pension account at his place of residence, then he may make a lump-sum transfer of the funds from his account to the individual pension account of his place of residence according to the established procedure of the Law of RA on “Funded pension”.

Question 97. How will a participant’s heir receive the money if he has dual citizenship?

The fact of dual citizenship does not limit the rights of a person in any way in the funded pension component. If a person with dual citizenship receives a basic income in Armenia, he is obligated to make targeted contributions. Before attaining the pension age a participant can receive his savings in the form of a lump-sum payment if he renounces the citizenship of the Republic of Armenia and leaves abroad for permanent residence.

Question 98. What happens if a participant’s heir is a military servant?

First of all it should be mentioned that relations concerning inheritance of funded pension assets both in the phase of accumulation of the assets and in the phase of turning them into pension payments are regulated by the Law of RA on "Funded pension" and the Civil Code the of RA. 
In the event of the mandatory component participant’s death in the phase of accumulation of asset, pension assets existing at his pension account are transferred to his heir’s pension account (with the exception if the heir is not a citizen of RA and does not have a pension account at the Register of participants). Only 25-fold of the basic pension of the participant’s pension assets may be received by the heir in cash. 

If the heir is not a participant of the funded component, such as a military servant, then the Register of participants is obliged to open a pension account for him and transfer the appropriate amount of inherited pension fund shares to that pension account regardless of the heir’s age. Since then, the heir acquires all rights and obligations defined by the Law of the “Funded pension” for the participant of the mandatory pension fund, with the exception of the obligation of making targeted social contributions. 

In the event of the mandatory component participant’s death in the phase of payment of funded pension savings, i.e. in the phase of receiving pension, the inherited pension is transferred to the heirs as prescribed by the law. 

Question 99: A participant has become disabled before reaching age 63. Is he entitled to receive his funded pension?

If a person has a 3rd degree working incapacity, then he may withdraw his pension savings in the form of a lump-sum payment before reaching age 63. 
Certainly, the above mentioned fact does not mean that the person will not be eligible for a disability pension provided by the state PAYG pension system. In case a person is duly recognized as disabled, he will receive a disability pension from the state PAYG pension system. 

Question 100. Will a person be eligible to receive the full amount of accumulated funds as a lump-sum payment before age 63?

In certain exceptional cases a person will be eligible to receive the full amount of his accumulated pension funds before the pension age. (See question 89.)

Question 101. What rights do spouses have to each other's mandatory accumulative funds (pension fund shares) in case of divorce?

Spouses’ accumulative pension funds (pension fund shares) are considered to be the private ownership of each of them, i.e. regime of common marital ownership will not be applied to these funds. In case of divorce none of the spouses may have any pretentions to each other's mandatory funded pension savings.

Question 102. Can a person’s mandatory accumulative funds (pension fund shares) be seized based on a court order in relation to his proprietary obligations before attaining the pension age?

No. No seizure can be imposed on a person’s mandatory accumulative funds against proprietary obligations before he reaches age 63. This means that if a person has proprietary obligations to a bank or any other entity and his property is not sufficient for honoring these obligations, then no seizure may be imposed on his mandatory accumulative funds. A seizure can be imposed on a person’s mandatory funded pension against his proprietary obligations only after he reaches age 63, i.e. in the phase of receiving the funded pension. 

Question 103. Is a person entitled to receive only the state PAYG pension upon reaching 63 and postpone the receipt of his mandatory funded pension for an indefinite time-period?

Yes. Upon reaching age 63 a person can receive the state PAYG pension and postpone the receipt of his mandatory funded pension for an indefinite time-period. In the event the participant’s death his non-received funded pension savings will be inherited in the prescribed manner.
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