Category: Announcement
The new pension reform in Bulgaria – recommendations from OECD
The members of the BASPSC welcome the recommendations received from the OECD on the new pension reform.
– The OECD commends Bulgaria’s supplementary pension provision and supports future measures to improve it
– The strengths of supplementary pension insurance were recognised, including the multi-pillar pension model, the stable legal framework and competent risk-based supervision.
– The OECD also noted the scope for improving the pension system by introducing consumer choice between different investment strategies according to their life cycle and risk tolerance (the so-called “multi-fund model”, including funds with different investment profiles) and encouraged the review and changes of the rules governing investment options to achieve increasing returns.
A special article announced details of the letter received by the Ministry of Finance from the OECD recommending to prepare the necessary changes in private pensions. The main objective is to increase retirement incomes and ensure adequate pension payments
In February 2024 in the town of Sofia, the pension and insurance companies actively participated in the fact-finding mission of the Insurance and Private Pensions Committee of the Organisation for Economic Co-operation and Development (OECD), which carried out a review of supplementary pension security and assessed the compliance of Bulgarian legislation and supervisory activity with the OECD recommendations on key principles for the regulation of private pension funds. The OECD mission was accepted by the Ministry of Finance and the Financial Supervision Commission (FSC) with the participation of the Ministry of Labour and Social Policy, representatives of pension companies, business and social partners.
To this end, the competent institutions in the country should clearly and synchronously declare their commitment to the development of legal changes whose philosophy is supported in the context of the recommendations given by the OECD.
The Financial Supervision Commission and the Bulgarian Association of Supplementary Pension Security Companies have launched a dialogue and are ready to propose changes to the regulatory framework in the field of supplementary pension insurance, the ultimate goal of which is to increase the profitability of the management of individual funds of citizens.
Information from the website of the FSC (BG)
Mrs. Evelina Miltenova participated in the preparation of professional material for the IPE media on the supplementary pension insurance market and the prospects for pension funds in Bulgaria in 2024.
The country is trying to fulfill all the criteria set by the EU to finally join the Eurozone. “We, the branch association of the Bulgarian supplementary pension insurance companies, were invited and from 2022 we actively participated in the working group, consulting, actively discussing and giving proposals and opinions related to the national plan for the introduction of the euro, as well as the law for the introduction of the euro”, says Evelina Miltenova, president of the Bulgarian Association of Supplementary Pension Insurance Companies (BASPC).
Pension fund managers have considered the eurozone their home market since the country joined the EU in 2007. “We do not expect a significant change or expansion of investment alternatives, but operating in a stable euro market will be extremely important for insured persons. in the country,” she adds.
BASPC supports the increase of contributions in the second pillar from 5% to at least 10% to ensure sufficient additional pensions. “Increasing the level of contributions is another important point that needs to be addressed in order to increase pension savings and pension payments. Twenty years of saving is not enough for a decent pension; the minimum is 30-35 years of saving during the entire working life on the face,” says Miltenova.
“Now pension funds are not allowed to change the portfolio, for example by being more aggressive in the initial phase of saving and becoming more conservative at the end of the life cycle of accumulating pension investments. The proposal to introduce multi-funds was discussed in Bulgaria in recent years and now it is likely and imperative that the topic be raised again at the political level in 2024,” she added.
You can see more details here:
IPE CEE report_Jan 24_Bulgaria
Results of the activity on supplementary pension insurance for the first half of 2023
The Social Security Supervision Department of the Financial Supervision Commission announced the results of the activity on supplementary pension insurance for the first half of 2023. The information is summarized on the basis of the reports for supervisory purposes submitted by the pension insurance companies to the Financial Supervision Commission. Data on the distribution of insured persons by gender and age in pension funds as of 30.06.2023 are also published.
The total number of insured persons in the four types of pension funds as of 30.06.2023 is 4 965 310 people, increasing by 42 056 people or 0.85 per cent compared to 31.06.2022 and by 77 649 or 1.59 per cent compared to 30.06.2022.
The largest share of insured persons is concentrated in universal pension funds – 80.29%. Persons insured in voluntary and occupational pension funds occupy a share of 12.97 per cent and 6.54 per cent, respectively. The smallest share of insured in voluntary pension funds under occupational schemes is 0.20%.
As of 30.06.2023, the net assets of pension funds are worth 21 079 926 thousand. Lv. Compared to 31.12.2022, the net assets of pension funds increased by 9.70%, and compared to 30.06.2022 by 14.08%.
The rate of growth of net assets differs by type of funds. The net assets of universal pension funds grew the fastest, which reported an increase of 15.10% compared to 30.06.2022, followed by occupational and voluntary pension funds with growth for the same period of 9.79% and 6.07%, respectively. The reported growth of voluntary pension funds under occupational schemes for the period is 4.26%.
The gross receipts from social security contributions to pension funds in the first half of 2023 are a total of 1 251 054 thousand. Lv. and increased by 16.15% compared to the first half of 2022. The proceeds from social security contributions in the UPF registered an increase of 19.73%, and in the PPF 15.59%. A decrease in the receipts from social security contributions is observed in voluntary pension funds and voluntary pension funds under occupational schemes.
The persons receiving payments from the funds for making payments as of 30.06.2023 are 16 096, of which 1 695 pensioners and 14 401 persons with deferred payments. These are persons who have been insured in universal pension funds and have reached retirement age. In the first half of 2023, 1 833 thousand were paid from the payment funds. Lv. for pensions, 29 354 thousand. Lv. for deferred payment of insured persons and 114 thousand. Lv. of pensioners’ heirs and persons who have received deferred payments. The average amount of pensions paid in the first half of 2023 is BGN 225.12 and the average amount of the deferred payment is BGN 399.08. Compared to the first half of 2022, the average amount of pensions paid increased by BGN 24.91, or by 12.44%, and the average amount of deferred payment increased by BGN 84.21, or by 26.74%.
Detailed information about the results of the activity on supplementary pension insurance for the first half of 2023, as well as about the insured persons and the accumulated funds in the pension funds as of 30.06.2023 by gender and age can be found in section: Social security activity / Statistics / Statistics and analyses.
Results of operations on supplementary pension insurance for the first quarter of 2023
The Social Security Supervision Department of the FSC announced the results of the activity on supplementary pension insurance for the first quarter of 2023. The information is summarized on the basis of the reports for supervisory purposes submitted by the pension insurance companies to the Financial Supervision Commission. Data on the distribution of insured persons by gender and age in pension funds as of 31.03.2023 are also published.
The total number of insured persons in the four types of pension funds as of 31.03.2023 is 4 952 281 people, increasing by 1.55% compared to 31.03.2022.
As of 31.03.2023 the net assets of the pension funds are worth 20 205 288 thousand. Lv. Compared to 31.03.2022, the net assets of pension funds increased by 5.07%.
Persons receiving payments from the funds for making payments as of 31.03.2023 14 194, of which 1 392 pensioners and 12 802 persons with deferred payments. These are persons who have been insured in universal pension funds and have reached retirement age. In the first quarter of 2023, 829 thousand were paid from the payment funds. Lv. for pensions, 13 676 thousand. Lv. for deferred payment of insured persons and 58 thousand. Lv. of heirs of persons who have received deferred payments.
The total revenues of pension insurance companies for the first quarter of 2023 amounted to 74,180 thousand. Lv. The net financial result of the companies for the period amounts to 27 871 thousand. Lv.
Detailed information about the results of the activity on supplementary pension insurance for the first quarter of 2023, as well as about the insured persons and the accumulated funds in the pension funds as of 31.03.2023 by gender and age can be found in section: Social security activity / Statistics / Statistics and analyses.