People’s pension savings should be encouraged, Hristina Hristova, former minister of labour and social policy, said in an interview with the Bulgarian National Radio. According to her, pension insurance concerns not only future pensioners, but also workers, their families, employers and businesses.
“People’s pension savings should be encouraged,” Hristova said.
The second pillar should provide additional income
She recalled that Bulgaria’s pension system has three pillars, with the first and second pillars developed. The second pillar has been operating in practice since 2022 following amendments to the Social Security Code. Its purpose is to provide an additional pension on top of that from the first pillar.
Hristova explained that an important indicator is the replacement rate—the share of labour income replaced by the pension. In her view, the funds in the second pillar should generate returns. She noted that around €17 billion has accumulated in the second pension pillar.
“The worst-case scenario is if you have contributed €10,000 and, when the time comes for you to retire, we still have €10,000,” Hristova said. She added that an insured person cannot lose the funds they have contributed.
Insured individuals need clearer information
Hristova said it was not clear to her whether consultations had taken place during the working phase between the government and the European Commission regarding contributions to the second pillar and the possible transfer of funds to the National Social Security Institute. She pointed out that distrust in institutions and the complexity of pension insurance require the state and pension companies to provide clear and comprehensible information.
The first pensioners to receive funds from the second pillar as well began receiving such payments in 2022. According to Hristova, their accounts have not yet accumulated the system’s full potential, as many of these people had been unemployed or had been insured on minimum amounts for years.
For younger insured individuals, the second pillar offers a longer accumulation horizon, Hristova stressed. She noted that the funds are personal, can be monitored by the insured and can be inherited.
Sources: novini.bg, bntnews.bg