The government is adopting a proposal to the National Assembly to amend and supplement the Social Security Code, which will enable the development of the capital market in Bulgaria. The change will allow for the investment of a huge available cash resource in the Bulgarian economy and infrastructure. This was stated by Prime Minister Rosen Zhelyazkov at the beginning of the meeting of the Council of Ministers. Zhelyazkov emphasized that this approach will also allow for the accumulation of funds in the Bulgarian pension system to increase pensions in the foreseeable future for every Bulgarian citizen.
„The change in the Social Security Code is extremely important – "This is a topic that has been under discussion for years, and the introduction of the multi-fund model in supplementary pension insurance funds is based on a recommendation from the Organization for Economic Cooperation and Development," said Finance Minister Temenuzhka Petkova, recalling that the Economic and Social Council has prepared an analysis outlining practices in other European Union countries with a pension insurance system similar to the Bulgarian one.
The main goal is to protect the interests of insured persons, and the draft amendment to the CSR creates the opportunity for supplementary pension insurance funds to create sub-funds on the basis of which to invest in extremely important structural projects. The amendments propose expanding the types of eligible investments of the funds with new financial instruments - such as money market instruments, growth market shares, exchange-traded funds that are not collective investment schemes and alternative investment funds with a registration regime. The investment restrictions of the new investment opportunities and the introduction of a multi-fund model are also detailed, the requirements for staffing of pension insurance companies in relation to investment activity will be increased.
With the new approach, insured persons will participate in the way in which their pension savings are invested in investment portfolios with a different risk profile. Insured persons will be able to choose not only a pension fund managed by a particular pension insurance company, but also the sub-fund with the investment profile – dynamic, balanced and conservative, which they find closest to their risk appetite.
“The change in CSR enjoys broad support from both employers and unions“, explained Minister Petkova.
In addition, the bill also develops the regulation of the payment of funds upon acquisition of the right to a pension from the point of view of better coverage of the risks assumed by pension insurance companies, including the method of calculating pensions and a more adequate update of pension payments.