site.btaParliament Approves Introduction of Multi-fund Model in Supplementary Pension Insurance at First Reading

The National Assembly on Friday approved at first reading amendments to the Social Insurance Code tabled by the Council of Ministers introducing a multi-fund model in supplementary pension insurance.

The amendments were supported by 103 MPs from GERB-UDF, Continue the Change – Democratic Bulgaria, Movement for Rights and Freedoms – New Beginning, Alliance for Rights and Freedoms. 37 from Vazrazhdane, the Bulgarian Socialist Party – United Left and Velichie voted against and seven abstained – one from There Is Such a People and six from MECh.

The deadline for proposals between the two readings will be three days, parliament decided. Thus, the amendments will enter into force on January 1, 2027, parliamentary Committee on Labour and Social Policy Chair and GERB-UDF Deputy Floor Leader Denitsa Sacheva said.

The introduction of a multi-fund model in supplementary pension insurance will allow insured persons to choose how their pension savings are managed, taking into account "the varying risk tolerance of different categories of individuals at different stages of their life cycle", the government says.

Within the pension fund, pension insurance companies will create sub-funds with different investment profiles - dynamic, balanced, and conservative - tailored to the life cycle of the insured persons, who will be able to choose a way in which their retirement savings are managed, taking account of the different risk tolerance. Those who choose to follow the life cycle approach, as well as those who are automatically allocated, will be transferred, according to their age: to a dynamic sub-fund if they are up to 50 years old; upon reaching the age of 50, they will be transferred to a balanced sub-fund with a lower risk profile; and as they approach retirement age (3 years before), they will be transferred to a conservative fund, which has the lowest risk and aims to preserve the accumulated funds. 

The introduction of new types of eligible investments for pension insurance companies has been proposed in connection with the introduction of a multi-fund model, with the corresponding investment restrictions, as well as an increase in the capital requirements and staffing levels of those companies.

Deputy Finance Minister Kiril Ananiev explained that prior to the submission of the bill, a comprehensive review of the supplementary pension insurance model had been carried out. Insured persons are given the opportunity to choose how their pension savings are managed, taking into account their life cycle, he added.