The pension reform in Armenia more than a decade ago led to a groundbreaking impact with a multiplier effect through the years to come. The crucial role in the success of the reform is attributed to international fund managers, who came with a fresh mindset and strategic long-term focus. The activities of one of those entities have gone beyond traditional pension fund management and are now having a significant impact on the development of Armenia in multiple ways. Regional Post spoke to Arman Vardanyan, CEO of C-Quadrat Ampega Asset Management Armenia, to learn more.
Text : Nazareth Seferian
Photo : C-Quadrat Ampega Asset Management Armenia
Anyone living in Yerevan will often see groups of elderly travelers from European countries on guided tours of the city’s sights. They worked hard for most of their lives and, now retired, enjoy their pensions, with the time and money that allow them to travel and see the world. Meanwhile, most of Armenia’s pensioners remain close to or below the poverty line, often depending on family members to cover their daily expenses. Recognizing the gravity of this issue and the demographic tendencies in this area, Armenia completed a crucial process of pension reform in 2013 and introduced a mandatory funded pension system in the country. This paved the way for the entry of international pension manage-
ment companies into the market, with the added challenge of building the pension funds from scratch.
“This aligned perfectly with the core expertise of our shareholders, Austria-based C-Quadrat and Germany-based Ampega, part of the Talanx Group, both of whom specialize in long-term asset management and responsible investments,” says Arman Vardanyan, the CEO of C-Quadrat Ampega Asset Management Armenia.
Just over ten years since the reform was launched, there is good reason for optimism. According to the OECD’s Pension Markets in Focus 2024, Armenian pension funds rank 7th by real average annual internal rate of return (IRR) over the past decade among selected OECD and non-OECD countries, with a real average annual return of 4.4%. Only three OECD countries ranked higher—Costa Rica (5.6%), Israel (4.9%), and Australia (4.5%).
The pension system reform was a crucial step to secure the well-being of the Armenian people in the future. It was well planned and citizen-centric. Most importantly, there has been consistent follow-up and support from the Government and Central Bank throughout these years
says Arman.
The pension reform provides crucial resources for the long-term economic development of the country. As part of the concept, pension funds accumulate a critical mass of available financing that can provide patient capital for major infrastructure developments and other projects that will supercharge a country’s growth over decades. According to a recent OECD study, the assets in Armenia’s pension funds have gone up by 34.9% from 2023 to 2024 and constitute 10.7% of the country’s GDP. Nearly 23% of these assets are attributed to the income generated through the performance of the pension fund managers.
AYB School— Beneficiary of CQ CSR projects
However, the challenge here is that there needs to be the right opportunities that match this available funding. “As a pension fund, we have a threshold on the amount of risk we can tolerate. Additionally, the culture of equity investment has still not fully established itself in Armenia yet, given that we have historically had a bank-based financial system,” Arman explains. But the company’s approach to this challenging context has been a combination of audacity and patience. They have made small investments in Formula VC, believing that this will serve as a strong signal to international investors when it comes to the potential of the technology sector in Armenia.
C-Quadrat recognizes the vital role of capital market development in Armenia and actively collaborates with issuers while closely following market developments. The company has undertaken significant investments in the healthcare sector, including Vardanants Medical Center, and supported transformative initiatives such as the initial public offering (IPO) of fintech company Telcell— a landmark for Armenia’s stock market that is expected to set an example for other companies to follow. They are also working with Amber Capital and other stakeholders to look at clean energy opportunities that require a lot of funding and time, but promise both economic development and strategic energy independence for Armenia in the future.
At the same time, the pension system reform has not been an easy process for the population, and there are still many challenges that C-Quadrat faces every day. Levels of financial literacy in Armenia are growing very slowly, and long-term planning is difficult for a population that is more focused on short-term budgeting and expenditures. The company’s own research has shown that many Armenians plan on a horizon of around three months or up to one year at most, and only around 12% of people take the initiative to save for their own retirement.
With the new pension system, many of the risks related to this short-term planning are being mitigated. Given that the system is based on fairness, a young person who starts working in their twenties and retires in their sixties will get a decent pension even if they remain passive and do not choose a pension fund for themselves. Choosing a fund that better meets their risk/return expectations can maximize the benefit and lead to higher payouts by the time they retire.
The cumulative pension system gives an opportunity to take advantage of the long-term power of compound interest. We recommend being proactive when it comes to your future returns—even a modest improvement in returns can result in a significant increase in one’s pension size
says Arman.
Abricot Social Enterprise— Investee of CQ Social Fund
C-Quadrat believes that improved financial literacy would benefit the population and considers this to be a multistakeholder mission. “As a company, we’re doing our part to improve people’s understanding of how pension funds work, what the risks are, what the benefits are, and how each individual can take the lead in their future. There is a role here for everyone—public institutions, non-profits, and other private sector stakeholders,” Arman says. Besides the detailed quarterly reports on the performance of the funds that one would expect from any pension fund management company, C-Quadrat also publishes market commentaries, shares newsletters to keep customers updated, recaps these numbers in simpler videos, arranges numerous seminars and webinars to explain all the benefits of the participants, and implements a range of other initiatives to raise public awareness and encourage informed action.
For those who are interested in contributing more money for their pensions or other long-term plans, the company offers a solution that remains unique in the market so far. The CQ Armenia Growth Fund, a public fund registered in Armenia, was launched in 2019 and gives individuals the option of making additional investments, which they can later withdraw and use as needed. So, for individuals in Armenia who are knowledgeable and interested in investing, this is a good addition to fixed-term bank deposits or corporate bonds, especially when it comes to longer-term investing. While contributions to the pension funds today are conducted automatically and at fixed amounts based on a person’s income, the CQ Armenia Growth Fund allows individuals to contribute more or less at various times, depending on the money they have available. A hypothetical investment of 100,000 AMD made into this fund at its inception would have yielded around 148,000 AMD in mid-2025.
Besides impacting individual well-being through these solutions, C-Quadrat Ampega Asset Management Armenia is also directly contributing to social impact in the country. In 2023, the company launched the first institutional impact investment fund in Armenia, the CQ Social Fund. Focusing on UN Sustainable Development Goals, the fund prioritizes companies that have a positive impact on health and well-being, sustainable energy, quality education, and more.
ArmBionics—Investee of CQ Social Fund
The establishment of this fund is another example of long-term planning for Armenia, in Arman’s opinion. In his words, “We see both a need and an opportunity to address pressing social challenges through investment. In developing countries and even in developed markets, it’s nearly impossible for public social systems alone to address all societal needs. Globally, we’ve seen how social entrepreneurs and impact innovations can fill this gap. For example, The Big Issue started as a small newspaper sold by homeless people in the United Kingdom in 1991, and it has helped more than 120,000 people overcome homelessness and poverty over the past 34 years. We’re here to help catalyze that kind of progress in Armenia.”
However, it is important to note that the financing for this fund does not come from the pool of pension payments, given that this would not align with the company’s fiduciary duty. The fund is financed through C-Quadrat’s corporate social responsibility budget line. “The Company makes annual contributions to the fund from its annual net profit. This reflects our shareholders’ commitment to social progress.
In the future, the fund will become available for investment for external investors, like other corporations in Armenia or from abroad—Armenians from the Diaspora. This way, they can contribute to the fund and directly facilitate social development in Armenia, not through philanthropy but through a familiar investment framework—a regulated fund
Arman explains.
Ten companies have already received investment from the CQ Social Fund. Over time, the portfolio of the Fund will be diversified with various investment instruments, as well as from the perspective of social impact. “We realized that philanthropic grants alone are insufficient to address the challenges that these enterprises are trying to overcome. At the same time, many socially-driven enterprises lack access to growth capital, and reliance on grants has become a barrier to sustainable expansion. We offer a middle path between grants and full market-based funding,” Arman elaborates.
UWC Dilijan – Beneficiary of C-Quadrat Ampega CSR projects
Meanwhile, their current investees are already transforming lives on the ground. For instance, Armbionics is building prosthetic hardware solutions for people with upper-limb challenges—an issue of increasing global significance as conflicts spread around the world. Thanks to the patient capital of the CQ Social Fund, Armbionics has had the time to perfect its solution and also pivot into the area of software, essentially evolving into a repository of usage data that will allow other companies around the world to develop and improve their own prosthetic hardware. While the CQ Social Fund prioritizes impact when it comes to its investment decisions, there is also potential here for major international commercial success.
Vanadzor features another example of a CQ Social Fund investee—the social enterprise Apricot has created meaningful jobs there for more than 40 people with disabilities, fostering social integration and improving the quality of life of a group of vulnerable people that would otherwise not have had such an opportunity. Getting support from the CQ Social Fund is not just about money. “Having the CQ Social Fund as an investor adds significant credibility and can open doors to broader networks and funding opportunities,” Arman clarifies, suggesting that while early-stage social enterprises apply for financial support, what they end up receiving is much more—upskilling, strategic guidance, visibility, and more. C-Quadrat Ampega will go even further beyond soon by launching an acceleration program in order to help impact entrepreneurs create and grow their impactful projects and become investable for the fund.
When it comes to impact investment, Arman acknowledges that the sector is still nascent in Armenia and sees an important role for the CQ Social Fund. “We aim to be a catalyst for the growth and sustainability of social enterprises in Armenia. In essence, we are their true partners, not just providers of capital.”
The long-term view that C-Quadrat Ampega Asset Management Armenia takes in their investment decisions is also matched by their actions in philanthropy. The central focus of their charitable donations is education, a topic that will take several decades before it provides positive returns for Armenia. “We have set up a scholarship fund of 120 million AMD with AGBU, which will be disbursed over the coming years to young learners displaced from Artsakh who have gained admission to high schools with international baccalaureate programs. We are also going beyond classroom learning and focusing on tech through Armath Labs in Syunik and music, providing instruments to kids from Artsakh who want to develop their skills in these crucial aspects of a holistic education,” Arman says.
Economic growth, social impact, and increased prosperity - broadly speaking, these are the outcomes that are increasingly being seen through the reform process that was launched more than a decade ago. There is a solid foundation now to look forward to 2037, when the first retirees in Armenia will receive their pensions through the reformed system. Thanks to the efforts of all stakeholders, including C-Quadrat Ampega Asset Management Armenia, by then the country should expect a flourishing economy, an established impact investment sector, and pensioners who can spend their excess income on their grandchildren at home and enjoy their holidays abroad.
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