The multi-fund model comes into effect from January 1, 2027, and by November 30th the three-month period expires, in which insured persons for the first time have the opportunity to state their preferences on how their personal account in the second pillar should be managed. This was said by the Chairperson of the BADDPO Board Evelina Miltenova to students and lecturers from the UNWE at the forum “Education, institutions and business: partnership for a sustainable and socially responsible future“.
Miltenova reminded that the choice of a sub-fund is a right, not an obligation, and can be changed every 12 months. In the absence of a choice, insured persons will be distributed according to age - up to 50 years old in a dynamic sub-fund, between 50 years old and 3 years before retirement - in a balanced one, and after that - in a conservative one.
Personal accounts in the second pillar are personal savings, accumulate profitability, are guaranteed and are inherited, Miltenova added. According to the latest data from pension companies, over 50% of citizens who have so far made a choice of a sub-fund have turned to the dynamic one. It has the opportunity to achieve the highest profitability above the gross contributions, which are 5% of the insured income.
The introduction of multi-funds is a good time for everyone to be informed in which pension fund their account is and what the amount of savings in it is, Miltenova said. And she added that for the first time, insured persons have the opportunity to choose how to manage their pension money from the capital pillars of the pension system.
“Pension is not a topic only for people at the end of their careers. This is a topic especially important for young people, who should start taking care of and saving for their retirement years at the beginning of their working life - both by providing themselves with real income and by taking an interest in the possibilities of the third pillar“, said Miltenova. The third pillar is voluntary, everyone can decide for themselves what amounts to contribute, when saving in it, a 10% tax relief is used, and the account can be withdrawn whenever its owner decides, she explained.
“Time is one of the greatest advantages of a young person, because pension savings accumulate and increase with the achieved profitability over decades“, said the Chairman of the Board of Directors of BADDPO. The multi-fund model allows for better use of the time until retirement, instead of all insured persons relying on the same investment approach - this will ultimately result in a higher second pension, Miltenova added.