Heavy words such as “nationalization” are being thrown around over the changes to the second pension pillar being prepared by the Ministry of Finance. Let us tone down the emotions a little and look at the facts, because the lobby of the private funds has already activated its powerful manipulation machine. The truth is quite different from what they are serving you.
This was commented on Facebook by Lyuboslav Kostov, the former chief economist of CITUB.
First, there is no “nationalization” whatsoever. The money accumulated so far in people’s individual accounts in universal pension funds (UPFs) will remain there, and no one will touch it. The speculation on this issue is just scare-mongering.
Second, what is actually happening is a change to the future distribution model, a reduction of the mandatory contribution to the UPFs from 5% to 2.5%, and the transfer of the remaining 2.5% to the National Social Security Institute (NSSI). Why is this beneficial to workers? Because the state pillar operates on the principle of solidarity and guarantees real pensions, while over the years the private funds have shown that they struggle even to match inflation with their returns, while regularly deducting their fees.
This strengthens the public social security fund, which supports current pensioners and guarantees future ones. Instead of the money of 4 million Bulgarians feeding the financial engine of a handful of private companies and being eroded by market risks, it will go into the solidarity-based system. The state is not “taking” this money for itself.
For years, I have criticized the neoliberal dogmatism that tried to convince Bulgarians that the private market would solve their social problems. It did not. They are solved by a functioning and strong social state. Of course, the devil is always in the details. I am waiting for the Ministry of Finance to officially publish the text of the 2027 State Budget Act on Friday so that the details can be examined. But at first reading, this decision sounds deeply rooted in solidarity and in the interests of working people. No one is touching people’s money, only the profits from the fees that private funds collect at their expense.