site.btaMulti-fund Reform Seen Strengthening Bulgaria’s Private Pension Pillar - Industry Expert

Bulgaria’s planned multi-fund pension system, set to take effect on Jan. 1, 2027, will modernize the country’s retirement savings model by allowing age-based investment strategies and greater choice for contributors, Evelina Miltenova, head of the Bulgarian Association of Supplementary Pension Security Companies (BASPPSC), said in an interview with BTA. The reform aims to improve long-term returns while maintaining strict regulation and protection of savers’ funds.

She said the decision by Parliament to adopt the reform is one of the most important steps for the future pensions of working people. The law has been promulgated, and pension companies are now preparing for the system to become operational on January 1, 2027. 

The reform will replace the current system, where all savers’ funds are invested under one conservative strategy regardless of age, with age-based investment profiles: dynamic, balanced, and conservative sub-funds. Younger contributors will be able to pursue higher-return investments, while savings will gradually shift to safer assets as retirement approaches. The model follows the widely used “life-cycle” approach applied in many advanced economies. 

Miltenova stressed that the reform does not increase risk, as investments will remain strictly regulated and supervised. Contributions to private pension funds remain legally guaranteed and inheritable. 

A key change is that insured individuals will, for the first time, be able to choose how their pension savings are invested, although an automatic allocation mechanism will apply for those who do not make an active choice. Participants will also be allowed to change funds or pension companies annually. 

She noted that future pension adequacy also depends on contribution levels, which remain at 5% instead of the originally planned 7%, and on reducing undeclared income in the grey economy.

Pension companies face significant organizational and technological work to implement the reform, alongside efforts to improve financial literacy among savers. The model draws on international experience from EU and OECD countries, including Croatia, Estonia, Poland, Romania, and Chile. 

Despite limitations of the current system, pension funds have delivered solid results, distributing more than BGN 5 billion in returns to over four million insured individuals in the past three years. Miltenova emphasized that pension reforms produce visible effects over the long term, typically within 10-20 years.