The ruling parties denied that they were preparing to transfer part of the contributions for second-pillar pensions to the National Social Security Institute. The reactions were prompted by reports that half of the mandatory 5% contribution to the second pension pillar could be directed to the state social security system.
The Ministry of Finance and representatives of the parliamentary Budget Committee denied that there was any such intention. Committee Chairman Konstantin Prodanov said that “there is no such thing, it is not being planned and it has not been planned”.
The issue was discussed on the “This Morning” programme by former Social and Economy Minister Lidia Shuleva, Bulgarian Industrial Capital Association Executive Director Dobromir Ivanov and Confederation of Independent Trade Unions in Bulgaria President Plamen Dimitrov.
What the warnings are
Lidia Shuleva raised the question of what insured people would receive after 20 years if part of the funds were transferred to the National Social Security Institute. In her words, such a measure could temporarily fill a budget deficit, but would not guarantee higher future pensions.
“The main question that needs to be answered is what people will receive if this money goes to the National Social Security Institute after 20 years,” Shuleva said.She also recalled the approved creation of multi-funds, which are intended to allow the funds in the second pension pillar to be managed with different levels of risk and potential returns. Shuleva also raised the issue of the management of the Silver Fund, which, in her view, generates no returns despite having been established to support the financial stability of the pension system.
Dobromir Ivanov described a possible reduction in the contribution as a formal retreat from the pension reform launched in 2002. He clarified that the option under discussion did not envisage taking away funds that had already been accumulated, but rather changing the distribution of future contributions.
“Reducing the contribution that goes to the second pillar would, in practice, reduce precisely the pensions from these funded pillars,” Ivanov warned.Trade unions defended the three-pillar model
Plamen Dimitrov also opposed the possible redirection of funds to the National Social Security Institute. The president of the Confederation of Independent Trade Unions in Bulgaria said that such a step would call into question the three-pillar pension model, which, according to him, has enjoyed political and public support for more than 25 years.
“For us, this is unacceptable and inadmissible,” Dimitrov said, pointing out that the Economic and Social Council had already prepared an analysis with recommendations for the development of the three pension pillars.
At present, no decision has been announced to change the size or distribution of the contribution for second-pillar pensions. The dispute remains linked to the sustainability of the state social security system, the ageing population and the role of funded pension provision.
Sources: btvnovinite.bg, bntnews.bg