site.btaPension Funds Say Pension Reform Should Wait for Broad Discussion, Asset Quality Review

Pension Funds Say Pension Reform Should Wait for Broad Discussion, Asset Quality Review

Sofia, May 30 (BTA) - The Bulgarian Association of Supplementary Pension Insurance Companies (BASPIC) insists that the Finance Ministry plans for revising the Social Insurance Code to reform the system of complementary pension insurance - the second pillar of the Bulgarian pension system - be made after a broad public and institutional discussion and follow a forthcoming review of the pension funds' asset quality. The BASPIC position was made public by BASPSC Chairman Nikola Abadzhiev at a BTA-hosted news conference Monday.

The Association invites employers, experts from the Finance Ministry, independent experts, trade unions and the Ministry of Labour and Social Policy to discuss the proposals of the Finance Ministry.

The Finance Ministry proposes, among other things, that upon retirement people born after 1959 have their individual second-pillar pension accounts included in a common pool to make sure resources are available for payment of a life pension to all insured persons.

BASPSC insists that insured persons should be entitled to a free choice of the type and manner of payment of the supplementary pension.

BASPSC Board member Daniela Petkova said the organization would not make compromises with the rights of the insured to a free choice between several different options when they acquire the right to retire.

The Association insists that the Bulgaria should apply the practices used by countries with developed pension insurance systems. According to these, people can choose between several types of pension, use the money accumulated in their accounts in part of entirely, receive them at the time when they retire or a certain period of time before it, and also that the pensions should be inheritable.

The money in these personal pension accounts are the private property of the people and only their owners have the right to operate with them, according to the Association. "It will be uncompromising regarding any provision of the law that partly, if not entirely, violates the private ownership of these accounts," Petkova said. "This money should be used by the people whose property they are, not for the needs of any part of the pension system, be that first pillar or something else. These funds should be spent by the people as they consider best, with the condition that it is done after they are entitled to retirement of five years earlier."

The Association's proposal for changes to the Social Insurance Code is that nine types of pensions are offered for the insured to choose from. These include lifelong pensions, fixed term pensions and pensions with a guaranteed period of inheritance. Other than these nine types of pensions, it is also proposed that when a person is entitled to retire (and five years before that, as the current legislation says) he or she will be able to receive up to 50 per cent of the amount in the individual account at the universal pension fund.

The Finance Ministry suggests that this term be shortened to one year.

Petkova said that private pension funds are ready to pay all the kinds of pensions they have offered.

Even now voluntary pension funds pay pensions to the heirs, Abadzhiev added. From 2002 to 2015, more than 800 million leva have been paid out to the people under voluntary pension insurance, heirs included. Together with the payments made by the National Social Security Institute, these exceed 1,000 million leva.